19. Budgeted sales in Allen Company over the next four months are given below: S

Question

19. Budgeted sales in Allen Company over the next four months are given below: September October November December Budgeted sal$100,000 $160,000 $180,000 $120,000 All sales are on account. Collections for sales on account follow a stable pattern as follows: 50 of a month's credit sales are collected in the month of sale, 30% are collected in the month following sale, and i 5% are collected in the second month following sale. The remainder are uncollectible. Given these data, cash collections for December should be: A. $138,000 B. $133,500 C. $120,000 D. $103,500 20. The Carlquist Company makes and sells a product called Product K. Each unit of Product sells for $25 dollars and has a unit variable cost of $18. The company has budgeted the followi data for November: Sales (48,000 units) of $1,200,000, all on account. . Collections on account of $1,152,200. . A cash balance on November 1 of $48,000. Cash disbursements (payments, other than interest) during November of $1,260,000. . Depreciation expense was S10,000 . A minimum cash balance on November 30 of $10,000. If necessary, the company will borrow cash from a bank with interest at 2% per month. All borrowing will take place at the beginning of the month. Interest payments are due on the principle at the time it is repaid The amount of cash needed to be borrowed on November 1 is: A. $69,800 B. $79,800 C. $71,196 D. $59,800 E. SO

Explanation / Answer

19) Cash collection in december = (160000*15%+180000*30%+120000*50%) = 138000

so answer is a) $138000

20) Total cash available in november = 48000+1152200 = 1200200

Cash disbursement = 1260000

Cash deficiency = 1200200-1260000 = 59800

Cash needed to borrowed = 59800+10000 = 69800

so answer is a) 69800

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