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Conner Company is a medium-sized toy distributor

Accounting

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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.

B

udgeted amounts are as follows:

March

April

May

June

July

August

Sales

$10,000

$20,000

$30,000

$30,000

$50,000

$40,000

Costs:

Wages

1,500

2,000

2,500

1,500

Rent

500

500

500

500

Other

400

500

600

500

Total cash disbursements in August are expected to be:

a) $24,000

b) $45,500

c) $21,500

d) $31,000