#5 The following sales and purchases information relates to The Molly Company fo
ID: 2528675 • Letter: #
Question
#5
The following sales and purchases information relates to The Molly Company for the months of March through August:
Month Sales Purchases
March $10,000 $9,000
April 12,000 8,000
May 15,000 9,000
June 16,000 11,000
July 19,000 12,000
August 25,000 18,000
The Molly Company collects cash from its customers as follows::
In the month of sale (1% cash discount) 10%
In the month after the sale 75%
Two months after sale 10%
The amount anticipated to be uncollectible 5%
For purchases, Molly pays cash for 60% of the purchase in the month of purchase. The balance is paid in the following month.
A) Prepare a summary of Molly’s cash collections and cash disbursements for June through August.
Explanation / Answer
Molly's Cash Collection for the month of June Calculation June Collection in the month of Sale(10%*99%) 16000*10%*99% 1,584.00 Collection in the Next Month of Sale(75%) 15000*75% 11,250.00 Collection in the 3rd Month after Sale(10%) 10000*10% 1,000.00 13,834.00 Molly's Cash disbursements for the month of June Calculation June Paid in Same Month 11000*60% 6,600.00 Paid in Same Next Month 9000*40% 3,600.00 10,200.00
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