The following information pertains to Amigo Corporation: Month Sales Purchases J
ID: 2392302 • Letter: T
Question
The following information pertains to Amigo Corporation:
Month Sales Purchases
July $30,000 $10,000
August 34,000 12,000
September 38,000 14,000
October 42,000 16,000
November 48,000 18,000
December 60,000 20,000
? Cash is collected from customers in the following manner:
Month of sale (2% cash discount) 30%
Month following sale 50%
Two months following sale 15%
Amount uncollectible 5%
? 40% of purchases are paid for in cash in the month of purchase, and the balance is paid the following month.
Required:
a. Prepare a summary of cash collections for the 4th quarter.
b. Prepare a summary of cash disbursements for the 4th quarter.
Explanation / Answer
Summary of Cash Collection
October
November
December
(A) Sales
$ 42,000.00
$ 48,000.00
$ 60,000.00
(B) Collection in Current Month Before Cash Discount
$ 12,600.00
$ 14,400.00
$ 18,000.00
(C )Less Cash Discount
$ 252.00
$ 288.00
$ 360.00
(D=B-C) Net Collection For Current Month Sale
$ 12,348.00
$ 14,112.00
$ 17,640.00
(E) Collection for July
$ -
$ -
$ -
(F) Collection for August
$ 5,100.00
$ -
$ -
(G) Collection for September
$ 19,000.00
$ 5,700.00
$ -
(H) Collection for October
$ -
$ 21,000.00
$ 6,300.00
(I) Collection for November
$ -
$ -
$ 24,000.00
(J=D+E+F+G+H+I)Total Collection
$ 36,448.00
$ 19,812.00
$ 17,640.00
Summary of Cash Disbursements
October
November
December
(A) Purchases
$ 16,000.00
$ 18,000.00
$ 20,000.00
(B) Payment for Current Month
$ 6,400.00
$ 7,200.00
$ 8,000.00
(C ) Payment for Previous Month
$ 8,400.00
$ 9,600.00
$ 10,800.00
(D=B+C) Total cash Disbursement
$ 14,800.00
$ 16,800.00
$ 18,800.00
Working Notes
Working for Cash Collection
July
August
September
October
November
December
(A) Sales
$ 30,000.00
$ 34,000.00
$ 38,000.00
$ 42,000.00
$ 48,000.00
$ 60,000.00
(B) Collection in Current Month Before Cash Discount
$ 9,000.00
$ 10,200.00
$ 11,400.00
$ 12,600.00
$ 14,400.00
$ 18,000.00
(C )Less Cash Discount
$ 180.00
$ 204.00
$ 228.00
$ 252.00
$ 288.00
$ 360.00
(D=B-C) Net Collection For Current Month Sale
$ 8,820.00
$ 9,996.00
$ 11,172.00
$ 12,348.00
$ 14,112.00
$ 17,640.00
(E) Collection for July
$ 15,000.00
$ 4,500.00
$ -
$ -
$ -
(F) Collection for August
$ 17,000.00
$ 5,100.00
$ -
$ -
(G) Collection for September
$ 19,000.00
$ 5,700.00
$ -
(H) Collection for October
$ -
$ 21,000.00
$ 6,300.00
(I) Collection for November
$ -
$ -
$ 24,000.00
(J=D+E+F+G+H+I)Total Collection
$ 36,448.00
$ 19,812.00
$ 17,640.00
Working for Cash Disbursements
July
August
September
October
November
December
(A) Purchases
$ 10,000.00
$ 12,000.00
$ 14,000.00
$ 16,000.00
$ 18,000.00
$ 20,000.00
(B) Payment for Current Month
$ 4,000.00
$ 4,800.00
$ 5,600.00
$ 6,400.00
$ 7,200.00
$ 8,000.00
(C ) Payment for Previous Month
$ 6,000.00
$ 7,200.00
$ 8,400.00
$ 9,600.00
$ 10,800.00
(D=B+C) Total cash Disbursement
$ 4,000.00
$ 10,800.00
$ 12,800.00
$ 14,800.00
$ 16,800.00
$ 18,800.00
Summary of Cash Collection
October
November
December
(A) Sales
$ 42,000.00
$ 48,000.00
$ 60,000.00
(B) Collection in Current Month Before Cash Discount
$ 12,600.00
$ 14,400.00
$ 18,000.00
(C )Less Cash Discount
$ 252.00
$ 288.00
$ 360.00
(D=B-C) Net Collection For Current Month Sale
$ 12,348.00
$ 14,112.00
$ 17,640.00
(E) Collection for July
$ -
$ -
$ -
(F) Collection for August
$ 5,100.00
$ -
$ -
(G) Collection for September
$ 19,000.00
$ 5,700.00
$ -
(H) Collection for October
$ -
$ 21,000.00
$ 6,300.00
(I) Collection for November
$ -
$ -
$ 24,000.00
(J=D+E+F+G+H+I)Total Collection
$ 36,448.00
$ 19,812.00
$ 17,640.00
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