Multiple Choice

Choose the best answer or response by placing the

identifying letter in the space provided.

___ 1. Actual sales in Ward Company were

$30,000 in June, $50,000 in July, and $70,000 in Au-

gust. Sales in September are expected to be $60,000.

Thirty percent of a months sales are collected in the

month of sale, 50% in the first month after sale, 15%

in the second month after sale, and the remaining 5%

is uncollectible. Budgeted cash receipts for September

should be: a) $60,500; b) $62,000; c) $57,000; d)

$70,000.

___ 2. Beecher Inc. is planning to purchase inven-

tory for resale costing $90,000 in October, $70,000 in

November, and $40,000 in December. The company

pays for 40% of its purchases in the month of purchase

and 60% in the month following purchase. What

would be the budgeted cash disbursements for pur-

chases of inventory in December? a) $40,000; b)

$70,000; c) $58,000; d) $200,000.

___ 3. Archer Company has budgeted sales of

30,000 units in April, 40,000 units in May, and 60,000

units in June. The company has 6,000 units on hand on

April 1. If the company requires an ending inventory

equal to 20% of the following months sales, produc-

tion during May should be: a) 32,000 units; b) 44,000

units; c) 36,000 units; d) 40,000 units.

___ 4. Refer to the data for Archer Company in

question 3. Each unit requires 3 pounds of a material.

A total of 24,000 pounds of the material were on hand

on April 1, and the company requires materials on

hand at the end of each month equal to 25% of the fol-

lowing months production needs. The company plans

to produce 32,000 units of finished goods in April.

How many pounds of the material should the company

plan to purchase in April? a) 105,000; b) 19,000; c)

87,000; d) 6,000.

___ 5. If the beginning cash balance is $15,000,

the required ending cash balance is $12,000, cash dis-

bursements are $125,000, and cash collections from

customers are $90,000, the company must borrow: a)

$32,000; b) $20,000; c) $8,000; d) $38,000.