INS I RUCI IONS FOR EXAM #3 To the student: You will need the information provid

Question

INS I RUCI IONS FOR EXAM #3 To the student: You will need the information provided below to answer certain questions to th exam. Please print and use for exam #3. Use the following to answer questions 1 & 2: Athens Manufacturing Company has budgeted the following raw material purchases for the last four months of the year: September October... $900,000 November.. $850,000 . $810,000 December At Athens, 25% of raw materials purchases are normally paid for in the month of purchase. The remaining 75% is paid for in the month following the purchase. Use the following to answer questions 3 &4 Rome Company will open a new store on January 1. Based on experience from its other retail outlets Rome is making the following sales projections: Cash Sales $60,000 $30,000 $40,000 $40,000 Credit Sales $40,000 $50,000 $60,000 $80,000 Januay February March. April. that 70% of the credit sales will be collected in the month following the

Explanation / Answer

Answer Part 1 Answer : C : $877500 (refer working note) Part 2 Answer : A : $585000 (refer working note) Working note: Statement of purchase budget Particular Amount September October November December January September sale $850,000 $212,500 $637,500 $0 $0 $0 October sale $900,000 $0 $225,000 $675,000 $0 $0 November sale $810,000 $0 $0 $202,500 $607,500 $0 December sale $780,000 $0 $0 $0 $195,000 $585,000 $877,500

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