Jumbotron Inc. had sales of $8,000 in November, $14,000 in December, and projects sales of $10,000 for January, $12,000 for February, and $8,000 for March. The firm's cost of goods sold every month is equal to 70% of the next month's sales. The firm collects its receivables in 60 days and pays its payables in 30 days. The firm begins January 1 with $10,000 in cash. All sales and purchases are on credit.

What are Jumbotron's total cash disbursements in March?

Question

What are Jumbotron's total cash disbursements in March?

Quizplus · Accepted Answer

To calculate Jumbotron's total cash disbursements in March, we need to determine the cost of goods sold (COGS) for March, which is based on April's sales. However, April's sales are not provided, so we use the information given for the months leading up to March. The COGS for a month is 70% of the next month's sales. For March, the COGS will be based on February's sales ($12,000), as purchases are paid in 30 days, meaning March's disbursements for COGS will be 70% of $12,000 = $8,400. However, the question asks for total cash disbursements in March, and without additional information on other possible disbursements (like operating expenses, rent, salaries, etc.), the most accurate answer based on the given data is the payment for COGS, which is $8,400. Since this option is not available, and considering the need for a correct choice based on the provided options, it seems there might be a misunderstanding in the calculation or the interpretation of the question. Given the options, none directly match the calculated disbursement of $8,400 for COGS in March, suggesting a need to reevaluate the answer choices or the question's details.