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ID: 2398889 • Letter: S
Question
So wrap Copy" omoe Updato T To keep up-to-date with security updatos, fxes, and improvernents, choose Check for Updat information was available from ABC Sales $ 72,000 $ 66,000 $ 60,000 Purchases $ 42,000 $ 48,000 $ 36,000 $ 54,000 S 60,000 10 May 13 78,000 August $66,000 15 16 17 18 19 Collections from customers are as follows: Month of sale One month following sale Second month following sale 10% On the purchase side, the Company takes full advantage of the 1 percent discount allowed on purchases paid for by the tenth of the following month 21 23 24 25 26 27 28 29 30 31 Additional information for the month of August is as follows: Cash disbursements for administrative expenses 14,400 S 5,000 S 18,000 Amortization expenses Cash balance on August 1 Required Compute the cash collections for the month of August. a) (3 Marks) Compute the cash disbursements for the month of August Compute the cash balance on August 31 Compute accounts receivable at August 31. Compute accounts payable at August 31 33 b (3 Marks) 35 c) 36 d) 37 e 3 Marks) (1 Mark) (1 Mark) 4PSheett+Explanation / Answer
Solution a:
Cash Collection for August = August Sales * 70% + July Sales*20% + June Sales *10%
= $66000*70% + $78000*20% + $60000*10% = $67,800
Solution b:
Cash Disbursement for August = Cash payment for purchases of July net of discount + cash payment for administrative expenses
= $54000*99% + $14400 = $67,860
Solution c:
Cash Balance on August 31 = Cash balance on August 1 + Cash collection for august - cash disbursement for August
= $18000 + $67800 - $67860 = $17,940
Solution d:
Accounts receivables at August 31 = August sales *30% + July sales *10% = $66000*30% + $78000*10% = $27,600
Solution e:
Accounts Payable at August 31 = Purchases in August = $60,000
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