(Appendix 10A) Conner Company Is a Medium-Sized Toy Distributor Total Cash Disbursements in August Are Expected to Be:
A)

(Appendix 10A) Conner Company is a medium-sized toy distributor. Experience has shown that 30% of sales are collected within the month of sale, 60% is collected the month after the sale, and 10% is collected two months after the sale. Inventory on hand at the end of a month is to be 70% of the next month's budgeted sales. Cost of goods sold is 50% of the selling price. Payment for purchases is made in the month after purchase. All other costs are paid in the month incurred. Budgeted amounts are as follows: $\begin{array}{ccccccc}&\text { March}&\text { April }&\text { May }&\text { June}&\text { July }&\text { August}\\ \text { Sales } & \$ 10,000 & \$ 20,000 & \$ 30,000 & \$ 30,000 & \$ 50,000 & \$ 40,00 \\ \text {Cost}&&&&&\\ \text { Wages } & & & 1,500 & 2,000 & 2,500 & 1,500 \\ \text { Rent } & & & 500 & 500 & 500 & 500 \\ \text { Other } & & & 400 & 500 & 600 & 500 \\\end{array}$
Total cash disbursements in August are expected to be:

A) $24,000
B) $45,500
C) $21,500
D) $31,000

Correct Answer:

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