Question

BusyBody Company expects its November sales to be 20% higher than its October sales of $180,000. Purchases were $110,000 in October and are expected to be $160,000 in November. All sales are on credit and are collected as follows: 35% in the month of the sale and 60% in the following month. Purchases are paid 40% in the month of purchase and 60% in the following month. The cash balance on November 1 is $13,500. The cash balance on November 30 will be?

A. $4,100.

B. $53,600.

C. $67,100.

D. $40,100.

Answer 1

Answer:

The correct answer is C.

Explanation:

Giving the following information:

BusyBody Company expects its November sales to be 20% higher than its October sales of $180,000. Purchases were $110,000 in October and are expected to be $160,000 in November.

All sales are on credit and are collected as follows: 35% in the month of the sale and 60% in the following month. Purchases are paid 40% in the month of purchase and 60% in the following month. The cash balance on November 1 is $13,500.

Sales November= 180,000*1.20= 216,000

Purchases= 160,000

Cash balance:

Sales= 216,000*0.35= 75,600

Sales From October= (180,000*0.6)= 108,000

Cash balance from October= 13,500

Purchases= (160,000*0.4)= (64,000)

Purchases from October= (110,000*0.6)= (66,000)

Total= 67,100