Please provide detailed instructions on how to solve both questions. Thank you.
ID: 2401655 • Letter: P
Question
Please provide detailed instructions on how to solve both questions. Thank you.
The following data have been taken from the budget reports of Sequoia Company, a merchandising company, which purchases merchandise inventory and sells to customers. The information on the sales to customers and the purchase of the inventory is given below Fe March Sales Purchases $100,000$200,000 S160,000 $160.000 May 240.000 $280,000f $260.000 $140.000 $160,000$154,000 Additional Information: 280,000 a. b. c· d. e. f. The % of purchases paid for cash at the time of purchase The % of purchases paid in the next month after the purchase: The % of purchases paid in the second month after the purchase: Purchases for November and December in the previous year: The Collections are expected to be as follows: 40% 30% 30% $ 150,000 per month Sold is 2,oo 60% in the month of the sale 40% in the month following the sale g. Employee wages are 10% of sales for the month in which the sales occur and paid during the Other administrative expenses are 20% of the following month's sales and the entire amount is paid during the current month. This amount includes depreciation expense for the office equipment of $13,000 h. . Interes payments of $2.100 are paid quarterly in January and April(monthly interest is s700).313°J j. k. Sequoia is planning to declare cash dividends in April to be paid in May: The balance in Retained Earnings is expected to be $210,000 on March 31 S10,000 6 Sequoia's accounts receivable balance at the end of April would be: Collectim. A. $168,000 S112,000 None of the above. s cash disbursements for the month of April would be: Merih B. C. $75,200 S157,600 $226,700 E. None of the above. Page 5 14Explanation / Answer
Correct option for Answer 6 (D)
Balance of Accounts Receivables at the end of April
Since 60% is collected in month of sale and 40 % in next month. The only amount due at the end of April would be 40% of April’s sale
April sale value
280000
Less- Collected in April (60%)
168000
Accounts Receivables Balance
112000
Correct option for Answer 7 (D)
Calculation of cash disbursements during April
Payment for Purchases
40% for april purchase
$ 61,600.00
30% for march purchase
$ 48,000.00
30% for February purchase
$ 48,000.00
$ 157,600.00
Employees Wages (10% 0f sales)
$ 28,000.00
Other Administrative expenses(20% of next month sale ,260000*20%)
$ 52,000.00
Interest paid(for Quarter)
$ 2,100.00
Total
$ 239,700.00
Less: Non cash Expenses(depreciation)
$ 13,000.00
Total Cash Disbursements in April
$ 226,700.00
Note* Dividend is only declared in April but actual payment is done in may. Dividend will not be included in April’s Cash Disbursements.
Correct option for Answer 6 (D)
Balance of Accounts Receivables at the end of April
Since 60% is collected in month of sale and 40 % in next month. The only amount due at the end of April would be 40% of April’s sale
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