Skye Company has problems managing cash. Other data are as follows: Purchases of
ID: 2498296 • Letter: S
Question
Skye Company has problems managing cash.
Other data are as follows:
Purchases of inventory are 55% of sales.
Payments for purchases of inventory are made one month after purchase.
Selling expenses are 12% of sales and are paid in the same month as the associated sales.
Administrative expenses (excluding rent and depreciation) are 15% of sales and are paid in the same month as the associated sales.
Rent expense is $2,200 per month and is paid each month.
Equipment depreciation is 3% of sales.
Required:
From the above data determine cash disbursements for May and June and the Accounts Payable for purchases balance as of June 30.
April May June Sales $120,000 $125,000 $132,000Explanation / Answer
Solution:
Cash Disbursement Schedule May June Sales 125,000 132,000 Purchases - 55 % of sales 68,750 72,600 Payments Payment for purchase 66,000 68,750 Selling expnse - 12 % of sale 15,000 15,840 Administrative Expense - 15 % of sale 18,750 19,800 Rent Expense 2,200 2,200 Depreciation Non cash Non cash Total disbursements 101,950 106,590 Accounts Payable on June 30 72,600Related Questions
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