Kekaha\'s expects its September sales to be 20% higher than its August sales of
ID: 2562784 • Letter: K
Question
Kekaha's expects its September sales to be 20% higher than its August sales of $154,421. Purchases were $96,338 in August and are expected to be $120,833 in September. All sales are on credit and are collected as follows: 38% in the month of the sale and the remaining in the following month. Merchandise purchases are paid as follows: 19% in the month of purchase and the remainder in the following month. The beginning cash balance on September 1 is $7,679. What would the ending cash balance on September 30 be:
Explanation / Answer
Solution:
August
September
Expected Sales (on account)
$154,421.00
$185,305.20
Cash Collection from on account sales
August Sales
$58,679.98
$95,741.02
September Sales
$70,415.98
Total Cash Collection (A)
$58,679.98
$166,157.00
August
September
Purchases
$96,338.00
$120,833.00
Payment for Merchandise Purchases
August Purchases
$18,304.22
$78,033.78
September purchases
$22,958.27
Total Cash Payment for purchases (B)
$18,304.22
$100,992.05
Calculation of Ending Cash Balance for September
August
September
Beginning Balance
0
$40,375.76
Total Cash Collection (A)
$58,679.98
$166,157.00
Less: Total Cash Payment for purchases (B)
$18,304.22
$100,992.05
Ending Cash Balance
$40,375.76
$105,540.71
Ending Cash Balance of September = $105,540.71
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August
September
Expected Sales (on account)
$154,421.00
$185,305.20
Cash Collection from on account sales
August Sales
$58,679.98
$95,741.02
September Sales
$70,415.98
Total Cash Collection (A)
$58,679.98
$166,157.00
August
September
Purchases
$96,338.00
$120,833.00
Payment for Merchandise Purchases
August Purchases
$18,304.22
$78,033.78
September purchases
$22,958.27
Total Cash Payment for purchases (B)
$18,304.22
$100,992.05
Calculation of Ending Cash Balance for September
August
September
Beginning Balance
0
$40,375.76
Total Cash Collection (A)
$58,679.98
$166,157.00
Less: Total Cash Payment for purchases (B)
$18,304.22
$100,992.05
Ending Cash Balance
$40,375.76
$105,540.71
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