Management expects to sell equipment that costs $20,000 at a gain of $5,000. Accumulated depreciation on this equipment is $5,000. а. Management expects to sell 7,300 cases of water in August and 9,800 cases in September. Each case sells for $14. Cash sales average 10% of total sales and credit sales make up the rest. Three-fourths of credit sales are collected in the b. month of the sale, with the balance collected the following month. The company pays rent and property taxes of $4,300 each month. Commissions and other selling expenses average 20% of sales. Agua Pure pays one-half of commissions and other selling expenses in the month incurred, with С. the balance paid the following month.

Management expects to sell equipment that costs $20,000 at a gain of $5,000. Accumulated depreciation on this equipment is $5,000. а. Management expects to sell 7,300 cases of water in August and 9,800 cases in September. Each case sells for $14. Cash sales average 10% of total sales and credit sales make up the rest. Three-fourths of credit sales are collected in the b. month of the sale, with the balance collected the following month. The company pays rent and property taxes of $4,300 each month. Commissions and other selling expenses average 20% of sales. Agua Pure pays one-half of commissions and other selling expenses in the month incurred, with С. the balance paid the following month.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Preparing a financial budget
Agua Pure is a distributor of bottled water. For each of the items, compute the amount of
cash receipts or payments Agua Pure will budget for September. The solution to one item
may depend on the answer to an earlier item.
Management expects to sell equipment that costs $20,000 at a gain of $5,000.
Accumulated depreciation on this equipment is $5,000.
а.
Management expects to sell 7,300 cases of water in August and 9,800 cases in
September. Each case sells for $14. Cash sales average 10% of total sales and
credit sales make up the rest. Three-fourths of credit sales are collected in the
b.
month of the sale, with the balance collected the following month.
The company pays rent and property taxes of $4,300 each month.
Commissions and other selling expenses average 20% of sales. Agua Pure pays
one-half of commissions and other selling expenses in the month incurred, with
С.
the balance paid the following month.

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