Question

The table contains the Sales estimates for the next year. The Purchases are 22% of Sales. Purchases are paid in the following month. The administrative expenses of $5,777 are paid each month Tax expenses of $70,307 are paid in March, June, September, and December each year. Rent expenses of $20,971 are paid in June and December. What is the cash outflow for December? Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box.

Jan- 47,538

Feb- 47, 859

Mar- 53, 620

Apr- 51, 519

May- 47,538

June- 47,859

July- 51,519

Aug- 53, 620

Sep- 47,538

Oct- 53,620

Nov- 47, 859

Dec- 51, 519

Answer 1

Answer:

Items	January	February	March	April	May	June	July	August	September	October	November	December
Sales($)	47,538	47,589	53,620	51,519	47,538	47,589	51,519	53,620	47,538	53,6320	47,859	51,519
Purchases($)*	-	.22*47,538 ie: 10,458.36	.22*47589 ie: 10,469.58	.22*53620 ie: 11796.40	.22*51519 ie. 11,334.18	.22*47,538 ie. 10,458.36	.22*47,589 ie. 10,469.58	.22*51.519 ie. 11,334.18	.22*53,620 ie. 11796.40	.22*47538 ie. 10,458.36	.22*53,620 ie. 11796,40	.22*47,589 ie. 10,458.36
Administrative Expenses**	$5,777	$5,777	$5,777	$5,777	$5,777	$5,777	$5,777	$5,777	$5,777	$5,777	$5,777	$5,777
Rent Expenses***						$20,971						$20,971
Tax Expenses****			$70,307			$70,307			$70,307			$70,307

*Purchases are a cash outflow and they are given as 22% of Sales of the .Also as given in the question:purchases are paid in the following month.So January Purchases will be paid in February and so on.

**Administrative Expenses are paid each month and is also a cash outflow

*** Rent Expenses are paid in June and December only and is a cash outflow

*** Tax Expenses are paid in March,June,September and December and is also a cash outflow

Again,

Total Cash Outflow in December= Purchase Expenses+ Administrative Expenses+Rent Expenses+Tax Expenses

Now substituting the relevant information from the above table we get:

Total Cash Outflow in December=$10, 458.36+ $5777+$ 20,971+$ 70,307 ie: $ 1,07,513.36