COGS are 80% of Sales. You collect 40% of sales in the month of sale and the rem

Question

COGS are 80% of Sales. You collect 40% of sales in the month of sale and the remaining 60% in the month following the sale. You purchase 50% of your COGS in the month of sale and 50% in the month prior to the sale. You pay for 30% of purchases in the month that it is purchased and the remaining 70% in the month after it is purchased.

2. How much was Cash Received in April?

4400                b) 4800           c) 5400                       d) 5800

3. What is the Inventory balance for the end of January?

2240                b) 2400           c) 2680                       d) 2860

Dec May MarchApril 5000 4000 Jan 10000 8000 7000 5600 8800 5200 1560 7240 6000 4800 6600 4400 7000 5600 6400 Sales Cost of Goods Sold Cash Received Purchases Cash Us ed Cash Generated by operation:s 6000 4800 4400 4400 1200 5200 4640 4480 1920 1640 Cash Accounts Receivable Inventory Accounts Payable 8240 4200 11080 1000 6000 2800 9880 3600 2000 3600 2800 13760 4200 2400 4760 8400 78407840 84006720

Explanation / Answer

2 Cash Received in April Cash received for the sales made in Monthof April 2400 [6000*40%] Cash received for the sales made in Monthof March 3000 [5000*60%] Answer is © 5400 3 Inventory balance for the end of January Opening Balance of Inventory on 01 Jan/Closing Balance of inventory of Dec31 2800 Add: Purchases 5200 Less:COGS -5600 Closing Inventory [B] 2400

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