Problem IZ Rich Company\'s experience shows that 20% of its sales are for cash a

Question

Problem IZ Rich Company's experience shows that 20% of its sales are for cash and 80% are on credit. An analysis of credit sales shows that 50% are collected in the month follo sale, 45% are collected in the second month, and 5% prove to be uncollectible. the Calculate August September October November $500,000 $525,000 $535,000 $560,000 October November (1) Receipts from cash sales . (2) Collections from August credit sales... Collections from September credit sales (4) Collections from October eredit sales.. (5) Total cash collections during the month (1 Use the following data to determine the company's cash disbursements for each month of August and September: August September July $24,000 $32,000 $36,000 14,400 $19,200 S21,600 One month after purchase Selling expenses....................- 15% ofsales, paid in the month ofsale Administrative expenses 10% of sales, paid in the month of sale Rent expense$2,400 per month Equipment depreciation.S1,300 per month

Explanation / Answer

EXPECTED CASH COLLECTIONS OCTOBER NOVEMBER Receipts from Cash sales 107,000 112000 Collection from August sales 180,000 Collections from Sep sales 210000 189000 Collections from Oct sales 214,000 Total Cash Collections 497,000 515,000 EXPECTED CASH PAYMENTS AUG SEP Payment of July purchases 14,400 Payment of Aug purchases 19200 Selling expense 4800 5400 Admin expense 3200 3600 Rent expense 2400 2400 Total Cash disbursement 24,800 30,600

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