Hiruit Company's Sales in December Were $5,500 Gross Margin Is 30

Hiruit company's sales in December were $5,500. It expects sales to increase 10% in January and February and 15% in March. All of its sales are made on credit. The typical collection pattern is:
$\begin{array}{ll}\text { Collections }&\text { Percentage of total receivables }\\\text { In month of sale } & 10 \% \\\text { In second month } & 70 \% \\\text { In third month } & 15 \% \\\text { Not collectible } & 5 \%\end{array}$
Gross margin is 30%. Inventory levels at the end of December are $900 and are expected to grow at the same rate as sales. Purchases are paid for the month after they are made. Net accounts receivable at the end of December are $400.
-What cash is paid for purchases in the month of March?

A) $5,520.62
B) $4,757.50
C) $4,559.50
D) $2,095.50

Correct Answer:

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