Question

1.The manager of MN Company give you the following data to prepare the required purchases for the coming three months (January, February and March)
Estimated sales for January	$ 100,000
Sales increase by	5%	for the coming three months
Cost of goods sold (CGS)	60%	of sales
Beginning inventory	$ 12,000
Ending inventory equal to	20%	of next month CGS

Find the total purchases needed for February.

	a.	between $60,000 and $61,000
	b.	between $63,000 and $64,000
	c.	between $66,000 and $67,000
	d.	between $68,000 and $69,000

2.

Tany Company has the following data
Account Receivable
December-31-2005	$90,000.00
January-30-2006	$120,000.00
Sales during
December 2005	x
January 2006	y
Sales collections
During the month of sales	40%
Next month of sales	60%
Normally there is no bad debt
Find the sales made during December

	a.	$150,000.00
	b.	$225,000.00
	c.	$200,000.00
	d.	$300,000.00

Answer 1

Ans 1 Particulars Sales January February March $1,00,000 $1,05,000 $1,10,250 ($100000 x 105%] ($105000 x 105%] Cost of Good Sold Plus : Desired Ending Inventory $60,000 $63,000 $66,150 ($100000 x 60%] ($105000 x 60%] ($110250 x 60%] $12,600 $13,230 ($63000 x 20%] ($66150 x 20%] $72,600 $76,230 $12,000 $12,600 $60,600 $63,630 Total Inventory needed Less: Beginning Inventory Purchases Total purchases for February is $63,630 The correct answer is option (b) i.e. between $63,000 and $64,000 Ans 2 $90,000 Account Receivable December-31-2005 Sales collection in next month of sales is 60% Account Receivable December-31-2005 is equal to 60% Sales for December 2005 is ($90000/60% x 100%] The correct answer is option (a) i.e. $150000 $1,50,000