21. Stockton Corporation is estimating the following sales for the first four mo

Question

21. Stockton Corporation is estimating the following sales for the first four months of next year: January February March $260,000 S230,000 $270,000 $320,000 April Sales are normally collected 60% in the month of sale, 35% in the month following the sale, and the remaining 5% being uncollectible. Based on this information, how much cash should Stockton expect to collect during the month of April? A. $286,500 B. $320,000 C. $192,000 D. $94,500 Patterson Corporation, a retailer, plans to sell 25,000 units of Product X during the month of August. If the company has 9,000 units on hand at the start of the month, and plans to have 7,000 units on hand at the end of the month, how many units of Product X must be purchased from the supplier during the month? A. 32,000 B. 23,000 C. 27,000 D. 25,000 22.

Explanation / Answer

21) Calculation of cash collected during month of April :

Cash Collected for the month of April = 60% of 320,000 = $192,000

Cash Collected for the month of March = 35% of 270,000 = $94,500

Total cash expected to collect = $192,000+$94,500 = $286,500

Therefore the correct option is A.) $286,500

22) Calculation of units to be purchased from supplier

Therefore the correct option is B) 23,000

Sales planned for the month of August 25,000 Add: Closing stock at the end of month 7,000 Less: Opening stock at the beginning of the month (9,000) Purchases from Supplier 23,000

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