Assume the following budgeted information for a merchandising company:Budgeted sales (all on credit) for November, December, and January are $241,000, $211,000, and $202,000, respectively.Cash collections of credit sales are expected to be 75% in the month of sale and 25% in the month following the sale.The cost of goods sold is always 65% of sales.Each month’s ending inventory equals 20% of next month’s cost of goods sold.40% of each month’s merchandise purchases are paid in the current month and the remainder is paid in the following month.Monthly selling and administrative expenses that are paid in cash in the month incurred total $21,500.Monthly depreciation expense is $21,000.The expected cash collections from customers in December are:

Answered: 2,000, respectively. Cash collections…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Concept explainers

Question

Assume the following budgeted information for a merchandising company:

Budgeted sales (all on credit) for November, December, and January are $241,000, $211,000, and $202,000, respectively.
Cash collections of credit sales are expected to be 75% in the month of sale and 25% in the month following the sale.
The cost of goods sold is always 65% of sales.
Each month’s ending inventory equals 20% of next month’s cost of goods sold.
40% of each month’s merchandise purchases are paid in the current month and the remainder is paid in the following month.
Monthly selling and administrative expenses that are paid in cash in the month incurred total $21,500.
Monthly depreciation expense is $21,000.

The expected cash collections from customers in December are:

Expert Solution

Step 1

Answer :

Sales of December = $211,000

Sales of November = $241,000

Receipt in December month :

75% of $211,000	$158,250
25% of 241,000	$60,250
	$218,500

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions