Whitney Corporation
Whitney Corporation,a reseller of women's fashions,has budgeted its activity for March.The budget information is presented below:
I. Sales are $ \$ 550,000 $. All sales are cash
II. Merchandise invent ory on February 28 is $ \$ 300,000 $
III. Budgeted depreciation for March is $ \$ 35,000 $.
IV. Cash in bank on March 1 is $ \$ 25,000 $.
V. Selling and administrative expenses are budgeted at $ \$ 60,000 $ for March and are paid in cash
VI. The planned merchandise inventory on March 31 is $ \$ 270,000 $.
VII. $\text { The invoice cost for merchandise purchases represents } 75 \% \text { of sales price. All purchases are paid for in cas1 }$

Refer to Whitney Corporation.The budgeted cash disbursements for March are:

Question

Whitney Corporation
Whitney Corporation,a reseller of women's fashions,has budgeted its activity for March.The budget information is presented below:
I. Sales are $ \$ 550,000 $. All sales are cash
II. Merchandise invent ory on February 28 is $ \$ 300,000 $
III. Budgeted depreciation for March is $ \$ 35,000 $.
IV. Cash in bank on March 1 is $ \$ 25,000 $.
V. Selling and administrative expenses are budgeted at $ \$ 60,000 $ for March and are paid in cash
VI. The planned merchandise inventory on March 31 is $ \$ 270,000 $.
VII. $\text { The invoice cost for merchandise purchases represents } 75 \% \text { of sales price. All purchases are paid for in cas1 }$

Refer to Whitney Corporation.The budgeted cash disbursements for March are:

Quizplus · Accepted Answer

To find the cash disbursements, we need to consider the following:

1. Cost of goods sold: 
- Cost of goods sold = 75% x Sales 
- Cost of goods sold = 75% x $550,000 = $412,500

2. Increase/decrease in inventory:
- Increase in inventory = $270,000 - $300,000 = -$30,000 (negative means decrease)
- We need to add this amount to the cost of goods sold: 
- $412,500 + (-$30,000) = $382,500

3. Selling and administrative expenses: 
- Budgeted selling and administrative expenses = $60,000

4. Depreciation: 
- Budgeted depreciation = $35,000

5. Total cash disbursements: 
- $382,500 + $60,000 + $35,000 = $477,500

Therefore, the best choice is B.

Whitney Corporation Whitney Corporation,a Reseller of Women's Fashions,has Budgeted Its $550,000 \$ 550,000 $550,000

Whitney Corporation
Whitney Corporation,a Reseller of Women's Fashions,has Budgeted Its $\$ 550,000$