What would be the expected cash disbursements

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Reference no: EM132607866

Information on the actual sales and inventory purchases of the Law Company for the first quarter follow:

                                                     Inventory Sales                  Purchases

January                                      $120,000                         $60,000

February                                        100,000                            78,000

March                                          130,000                                90,000

  • Collections from Law Company's customers are normally 60% in the month of sale, 30% in the month following sale, and 8% in the second month following sale. The balance is uncollectible. Law Company takes full advantage of the 3% discount allowed on purchases paid for by the end of the following month.
  • The company expects sales in April of $150,000 and inventory purchases of $100,000. Operating expenses for the month of April are expected to be $38,000, of which $15,000 is salaries and $8,000 is depreciation. The remaining operating expenses are variable with respect to the amount of sales in dollars. Those operating expenses requiring a cash outlay are paid for during the month incurred. Law Company's cash balance on March 1 was $43,000, and on April 1 was $35,000.

Problem 1: What would be the expected cash disbursements during April for operating expenses?

A) $23,000.

B) $15,000.

C) $38,000.

D) $30,000.

Reference no: EM132607866


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