Accounting_203_Chapter_7_Test - ACCOUNTING 203 Chapter 7...

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Chapter 7 Practice Test 1. Shown below is the sales forecast for Clovercast Inc. for the first four months of the coming year. Jan Feb Mar Apr Cash sales…………… $ 15,000 $ 24,000 $ 18,000 $ 14,000 Credit sales…………. $ 100,000 $120,000 $ 90,000 $ 70,000 On average, 50% of credit sales are paid for in the month of the sale, 30% in the month following sale, and the remainder is paid two months after the month of the sale. Assuming there are no bad debts, the expected cash inflow in March is: A) $138,000 B) $122,000 C) $119,000 D) $108,000 2. Paradise Company budgets on an annual basis for its fiscal year. The following beginning and ending inventory levels (in units) are planned for the next year. Beginning Ending Inventory Inventory Raw materials* 40,000 50,000 Finished goods 80,000 50,000 *Three pounds of raw materials are needed to produce each unit of finished product. If Paradise Company plans to sell 480,000 units during the year, the number of units it would have to manufacture during the year would be: A) 440,000 units B) 480,000 units C) 510,000 units D) 450,000 units 3. Berol Company plans to sell 200,000 units of finished product in July and anticipates a growth rate in sales of 5% per month. The desired monthly ending inventory in units of finished product is 80% of the next month’s estimated sales. There are 150,000 finished units in inventory on June 30. Everett Community College Tutoring Center
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This note was uploaded on 05/17/2011 for the course ACCT 203 taught by Professor Mac during the Spring '11 term at Chicago State.

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Accounting_203_Chapter_7_Test - ACCOUNTING 203 Chapter 7...

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