Question

The Food Company increased its ending inventory by $17,000 in 2018. The company also granted its customers more liberal credit terms which increased the accounts receivable by $37,500. Sales were $975,000 in 2018 and the accounts payable decreased by $27,500. The gross profit on sales is 45%. Selling and administrative expenses were $145,000; this included depreciation expense of $4,000. What was the cash disbursements for 2018?

Select one:

a. $ 599,750

b. $ 706,500

c. $ 689,500

d. $ 721,750

Question 16

Analysis of Hair Care Company’s citrus hair conditioner reveals that it is losing $5,000 annually. The company sells 5,000 units of citrus hair conditioner each year at $10 per unit. Variable costs are $6 per unit. None of the company’s fixed costs would be saved if the citrus hair conditioner were eliminated. What would be the increase or decrease in company net income if citrus hair condition were eliminated?

Select one:

a. Increase by $5,000

b. No effect

c. Decrease by $15,000

d. Decrease by $20,000

Answer 1