Reference no: EM132610181

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 inventory purchases?

A) $90,000.

B) $100,000.

C) $87,300.

D) $97,000.