*****THis questioned has been answered incorrectly before Cash flow exercise Jos

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*****THis questioned has been answered incorrectly before

Cash flow exercise

Joseph Pharmacy had sales of $25,000 in December and $30,000 in January. The company expects sales of $20,000 in February and $40,000 in both March and April, and $30,000 in May. The company has no other source of cash inflows. Half of the sales are paid for with cash. Twenty-five percent are paid for in each of the two months following the sale.

Joseph Pharmacy has the following expenses: (show all of your work)

Monthly rent of $1,500

Wages of $5,000 each month

Purchases

50% of next month’s sales

Cash Outlay

20% in month purchased

80% in following month

Explanation / Answer

25500

Particulars December January February March April May Sales 25000 30000 20000 40000 40000 30000 Cash Sales 12500 15000 10000 20000 20000 15000 December month sale recovery 0 3125 3125 0 0 0 January month sale recovery 0 0 3750 3750 0 0 February month sale recovery 0 0 0 2500 2500 0 March month sale recovery 0 0 0 0 5000 5000 April month sale recovery 0 0 0 0 0 5000 Total Cash Inflows 12500 18125 16875 26250 27500 25000

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