Sales on account are collected over a three-month period as follows: 20% collect

Question

   

Sales on account are collected over a three-month period as follows: 20% collected in the month of sale, 60% collected in the month following sale, and 18% collected in the second month following sale. The remaining 2% is uncollectible.

Purchases of inventory will total $371,000 for December. Thirty percent of a month’s inventory purchases are paid during the month of purchase. The accounts payable remaining from November’s inventory purchases total $201,500, all of which will be paid in December.

You have been asked to prepare a December cash budget for Ashton Company, a distributor of exercise equipment. The following information is available about the company’s operations:

Explanation / Answer

Solution.

Calculation Of cash buduget of december.

Date Particulars October November December 1-Dec Openning Cash      45,000 Cash sales      80,800          74,000          98,200 October    105,000       315,000          94,500 November    111,800       335,400       100,620 December    128,600       385,800       115,740 Total    471,200    1,110,200       409,060 1-Dec Purchase       111,300 November Purchase       141,050 Total Inventory Payment     (252,350) Selling and administrative     (416,900) New web server       (95,000) Dividends       (13,500) Cash Surplus / Deficiency     (368,690) Loan       388,690 Closing balance of cash          20,000

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.