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The cost of December merchandise purchases would be: P255,000 P139,500 P235,500 P240,00

The cost of December merchandise purchases would be: P255,000 P139,500 P235,500 P240,00

FINANCIAL ACCOUNTING
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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The cost of December merchandise purchases would be:

P255,000

P139,500

P235,500

P240,000

Alpha CD Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow: Sales are budgeted at P340,000 for November, P320,000 for December, and P310,000 for January. Collections are expected to be 80% in the month of sale, 16% in the month following the sale, and 4% uncollectible. The cost of goods sold is 75% of sales. The company purchases 60% of its merchandise in the month prior to the month of sale and 40% in the month of sale. Payment for merchandise is made in the month following the purchase. Other monthly expenses to be paid in cash are P24,000. Monthly depreciation is P15,000. Ignore taxes. Statement of Financial Position October 31 Assets: Cash. Accounts receivable (net of allowance for uncollectible accounts) Inventory . Property, plant and equipment (net of P572,000 accumulated depreciation). Total assets.... 20,000 70,000 153,000 1,094,000 P1,337,000 Liabilities and Stockholders' Equity: Accounts payable Common stock.... Retained earnings Total liabilities and stockholders' equity P 254,000 820,000 263,000 P1,337.000 ........
Transcribed Image Text:Alpha CD Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow: Sales are budgeted at P340,000 for November, P320,000 for December, and P310,000 for January. Collections are expected to be 80% in the month of sale, 16% in the month following the sale, and 4% uncollectible. The cost of goods sold is 75% of sales. The company purchases 60% of its merchandise in the month prior to the month of sale and 40% in the month of sale. Payment for merchandise is made in the month following the purchase. Other monthly expenses to be paid in cash are P24,000. Monthly depreciation is P15,000. Ignore taxes. Statement of Financial Position October 31 Assets: Cash. Accounts receivable (net of allowance for uncollectible accounts) Inventory . Property, plant and equipment (net of P572,000 accumulated depreciation). Total assets.... 20,000 70,000 153,000 1,094,000 P1,337,000 Liabilities and Stockholders' Equity: Accounts payable Common stock.... Retained earnings Total liabilities and stockholders' equity P 254,000 820,000 263,000 P1,337.000 ........
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