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Author Question: Cool Looks imports and distributes sunglasses in Southern California. The company's peak selling ... (Read 301 times)

chads108

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Cool Looks imports and distributes sunglasses in Southern California. The company's peak selling season has just passed and forecasted sales for the next few months is shown in the top row of the table. 40% of sales are cash and are collected in the month of the sale. 60% of sales are on credit, and are collected in the month following the sale. Cool Looks purchases merchandise one month in advance of sales and the cost of goods sold is 70% of sales. Cool Looks' suppliers are paid one month after the purchase. General and administrative expenses are $6,750 a month. Interest payments are $200 per month. Cool Looks will begin September with a cash balance of $10,000.

Cool Looks
Sales Forecast and Cash Budget
AugSeptOctNovDec
Sales Forecast$50,000$20,000$10,000$30,000$30,000
Cash Sales
Collections from last month
Total Cash Inflows
Purchases From Suppliers
Payments to Suppliers
General & Admin Expenses6,7506,7506,750
Interest200200200
Total disbursements
Net Cash Flow
Beginning cash balance$10,000
Plus: Net Cash Flows
Ending Cash balance$10,000 

Referring to Cool Looks, what are Cool Looks purchases in October?
◦ $14,000
◦ $16,000
◦ $18,000
◦ $19,000
◦ $21,000


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Marked as best answer by chads108 on Apr 25, 2021

marict

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