ation pertaining to Collection Corporation's sales revenue is presented below: November December January Cash sales $ 97,000 $ 126,000 $ 79,000 Credit sales 289,000 451,000 235,000 Total sales $ 386,000 $ 577,000 $ 314,000 Management estimates that 4% of credit sales are eventually uncollectible. Of the collectible credit sales, 60% are likely to be collected in the month of sale and the remainder in the month following the month of sale. The company desires to begin each month with an inventory equal to 70% of the sales projected for the month. All purchases of inventory are on open account; 20% will be paid in the month of purchase, and the remainder paid in the month following the month of purchase. Purchase costs are approximately 50
ation pertaining to Collection Corporation's sales revenue is presented below: November December January Cash sales $ 97,000 $ 126,000 $ 79,000 Credit sales 289,000 451,000 235,000 Total sales $ 386,000 $ 577,000 $ 314,000 Management estimates that 4% of credit sales are eventually uncollectible. Of the collectible credit sales, 60% are likely to be collected in the month of sale and the remainder in the month following the month of sale. The company desires to begin each month with an inventory equal to 70% of the sales projected for the month. All purchases of inventory are on open account; 20% will be paid in the month of purchase, and the remainder paid in the month following the month of purchase. Purchase costs are approximately 50
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Information pertaining to Collection Corporation's sales revenue is presented below:
| November | December | January | |
|---|---|---|---|
| Cash sales | $ 97,000 | $ 126,000 | $ 79,000 |
| Credit sales | 289,000 | 451,000 | 235,000 |
| Total sales | $ 386,000 | $ 577,000 | $ 314,000 |
Management estimates that 4% of credit sales are eventually uncollectible. Of the collectible credit sales, 60% are likely to be collected in the month of sale and the remainder in the month following the month of sale. The company desires to begin each month with an inventory equal to 70% of the sales projected for the month. All purchases of inventory are on open account; 20% will be paid in the month of purchase, and the remainder paid in the month following the month of purchase. Purchase costs are approximately 50% of the selling prices.
Budgeted cash payments in November for November inventory purchases by Collection Corporation are:
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