Collections from law companys customers are normally 60 in

Reference no: EM13578071

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

Sales Inventory 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. Selling and administrative 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 selling and administrative expenses are variable with respect to the amount of sales in dollars. Those selling and administrative 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.

Reference no: EM13578071

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