Question

In: Accounting

Hamby Corporation Balance Sheet June 30 Assets Cash $ 71,000 Accounts receivable 131,000 Inventory 45,500 Plant...

Hamby Corporation Balance Sheet June 30 Assets Cash $ 71,000 Accounts receivable 131,000 Inventory 45,500 Plant and equipment, net of depreciation 215,000 Total assets $ 462,500 Liabilities and Stockholders’ Equity Accounts payable $ 76,000 Common stock 307,000 Retained earnings 79,500 Total liabilities and stockholders’ equity $ 462,500 The company managers have made the following additional assumptions and estimates: Estimated sales for July, August, September, and October will be $260,000, $280,000, $270,000, and $290,000, respectively. All sales are on credit and all credit sales are collected. Each month’s credit sales are collected 35% in the month of sale and 65% in the month following the sale. All of the accounts receivable at June 30 will be collected in July. Each month’s ending inventory must equal 25% of the cost of next month’s sales. The cost of goods sold is 70% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts payable at June 30 will be paid in July. Monthly selling and administrative expenses are always $48,000. Each month $5,000 of this total amount is depreciation expense and the remaining $43,000 relates to expenses that are paid in the month they are incurred. The company does not plan to borrow money or pay or declare dividends during the quarter ended September 30. The company does not plan to issue any common stock or repurchase its own stock during the quarter ended September 30. How much is the Company's expected cash collections in the month of August?

How much is the Company's expected merchandise purchases in the month of September?

Solutions

Expert Solution

We are required to compute:

1. Expected cash collection in the month of August.

2. Expected merchandise purchases in the month of September.

We are provided with the following relevant details:

1. Balances of accounts payable and receivable as on beginning of quarter ending on September 30.

2. Details related to sales,purchase and cost of goods sold.

3. Details related to receipt from account receivable and payment to accounts payable

Computation of expected cash collection in the month of August ( we are assuming that just cash collection in August is required it means cash collection from Accounts receivable and cash sales, without adjusting Accounts payable and expenses)

Particular July August
Cash sales

91,000

(260000×35%)

98,000

(280000×35%)
Cash collection from Accounts receivable

131,000

(Bal. of June)

169,000

(260000×65%)
Total cash collection in the month of August 222,000 267,000

Expected merchandise purchases in the month of September:

Particular July August September
Closing inventory (w.n.1) 49,000 47,250 50,750
Add: Cost of goods sold (w.n.1) 182,000 196,000 189,000
Less: Opening inventory 45,500 49,000 47,250
Purchase of merchandise 185,500 194,250 192,500

w.n. (1) calculation of Cost of Goods sold and closing inventory:

Particular July August September
Sales 260,000 280,000 270,000
×COGS % 70% 70% 70%
Cost of goods sold 182,000 196,000 189,000

Closing inventory

(25% of next month COGS)

49,000

(196000×25%)

47,250

(189000×25%)

50,750

(290000×70%×25%)

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

The DSV Partnership decided to liquidate as of June 30, 20X5. Its balance sheet as of this date follows DSV PARTNERSHIP Balance Sheet At June 30, 20X5 Assets Cash Accounts Receivable (net) Inventorie...
The DSV Partnership decided to liquidate as of June 30, 20X5.Additional Information 1. The personal assets (excluding partnership loan and capital interests) and personal liabilities of each partner as of June 30, 20X5 follow:2. The DSV Partnership was liquidated during the months of July, August, and September. The assets sold and the amounts realized follow  Assume the following cash amounts were received during the months of July, August, and September from the sale of DSV Partnership's noncash assets July         ...
Balance Sheet As of December 31,2016 Assets Cash and equivalents 295,500 Accounts receivable 875,000 Inventory 437,500...
Balance Sheet As of December 31,2016 Assets Cash and equivalents 295,500 Accounts receivable 875,000 Inventory 437,500 Total Current Assets 1,608,000 Plant and equipment 475,000 Accumulated depreciation (234,550) Net Fixed Assets 240,450 Total Assets 1,848,450 Liabilities and Owner’s Equity Accounts payable 306,250 Short-term notes payable 88,185 Other current liabilities 18,200 Total Current Liabilities 412,635 Long-term debt 495,800 Total Liabilities 908,435 Common Stock 700,000 Retained earnings 240,015 Total Shareholder’s Equity 940,015 Total Liabilities and Owner’s Equity 1,848,450ZHIAO-WAY Inc. Income Statement For the...
Balance Sheet for J & P Industries 2018 Current assets Cash 215 Accounts receivable 310 Inventory...
Balance Sheet for J & P Industries 2018 Current assets Cash 215 Accounts receivable 310 Inventory 328 Total current assets 853 Fixed assets Net plant and equipment 6,527 Total assets 7,380 Current liabilities Accounts payable 298 Notes payable 1,427 Total currrent liabilities 1,725 Long-term debt 2,308 Owners' equity Common stock and paid in surplus 1,000 Retained earnings 2,347 Total owners' equity 3,347 Total liabilities and owners' equity 7,380 Income Statement for J & P Sales 4,053.00 Cost of goods sold...
Balance Sheet ASSETS Cash $96,000 Accounts receivable 31,000 Inventory 41,000 Prepaid expenses 18,000 Total current assets...
Balance Sheet ASSETS Cash $96,000 Accounts receivable 31,000 Inventory 41,000 Prepaid expenses 18,000 Total current assets $186,000 Gross plant and equipment 403,000 Accumulated depreciation (69,000) Total assets $520,000 LIABILITIES AND OWNERS' EQUITY Accounts payable $89,000 Accrued liabilities 62,000 Total current liabilities $151,000 Long-term debt 130,000 Common stock 206,000 Retained earnings 33,000 Total liabilities and equity $520,000 Income Statement Sales* $211,000 Cost of goods sold (85,000) Gross profit $126,000 Selling, general, and administrative expenses (27,000) Depreciation expenses (28,000) Operating income $71,000...
SMC, Inc. Balance Sheet December 31, 2018 Assets Cash ... $34,500 Accounts receivable .25,000 Inventory ..10,000...
SMC, Inc. Balance Sheet December 31, 2018 Assets Cash ... $34,500 Accounts receivable .25,000 Inventory ..10,000 Supplies .. 200 Total assets.. $69,700 Liabilities and Stockholders’ Equity Liabilities: Accounts payable .. $12,000 Salaries payable .. 1,000 Income taxes payable .. 3,675 Total liabilities.. $16,675 Stockholders’ equity: Capital stock (10,000 shares outstanding).. $25,000 Retained earnings .. 28,025 Total stockholders’ equity ...53,025 Total liabilities and stockholders’ equity.. $69,700 SMC, Inc. Income Statement For the Year Ended December31,2018 Sales revenue .. $110,000 Rent revenue.....
The Balance Sheet of the Illini as of 12/31/20X0: Assets Current Assets: Cash 1,500,000 Accounts receivable,...
The Balance Sheet of the Illini as of 12/31/20X0: Assets Current Assets: Cash 1,500,000 Accounts receivable, net 18,000 Inventory 50,000 Total current assets 1,568,000 Equipment 90,000 Goodwill 20,000 Total assets $1,678,000 Liabilities and shareholders' equity Shareholders' equity: Common stock, 20,000 shares outstanding, $1 par 20,000 Additional paid-in capital 280,000 Retained earnings 1,378,000 Total shareholders' equity 1,678,000 Total liabilities and shareholders' equity 1,678,000 Note that all additional paid-in capital (APIC) sub accounts (e.g., APIC-options and APIC-treasury stock), if any, are tracked...
The Balance Sheet of the Illini as of 12/31/20X0: Assets Current Assets: Cash 1,500,000 Accounts receivable,...
The Balance Sheet of the Illini as of 12/31/20X0: Assets Current Assets: Cash 1,500,000 Accounts receivable, net 18,000 Inventory 50,000 Total current assets 1,568,000 Equipment 90,000 Goodwill 20,000 Total assets $1,678,000 Liabilities and shareholders' equity Shareholders' equity: Common stock, 20,000 shares outstanding, $1 par 20,000 Additional paid-in capital 280,000 Retained earnings 1,378,000 Total shareholders' equity 1,678,000 Total liabilities and shareholders' equity 1,678,000 Note that all additional paid-in capital (APIC) sub accounts (e.g., APIC-options and APIC-treasury stock), if any, are tracked...
NYZ Corporation had the following Balance Sheet December 31, 2018 ASSETS Cash. $50,000 Accounts Receivable 80,000...
NYZ Corporation had the following Balance Sheet December 31, 2018 ASSETS Cash. $50,000 Accounts Receivable 80,000 Inventory 70,000 Total Current Assets 150,000 Property, Plant and Equipment (net) 200,00 Long Term Investments 50,000 Goodwill 100,000 Total Assets $500,000 LIABILITIES AND STOCKHOLDERS' EQUITY Accounts Payable $130,000 Accrued Expenses $120,000 Total Current Liabilities $250,000 Long-Term debt $150,000 Stockholders' Equity    common stock 10,000 Paid-In Capital 40,000 Retained Earnings 50,000 Total Liabilities & Stockholders' Equity $500,000 ALL REQUIRED ABC Company is thinking about purchasing...
Exam 3 Softbyte Inc. Balance Sheet December 31, 2012 Assets Cash $500,000 Accounts Receivable 700,000 Inventory...
Exam 3 Softbyte Inc. Balance Sheet December 31, 2012 Assets Cash $500,000 Accounts Receivable 700,000 Inventory 300,000 Property, Plant & Equipment 900,000 Accumulated Depreciation (100,000) 800,000 Total Assets $2,300,000 Liabilities & Equity Accounts Payable $300,000 Notes Payable 1,000,000 Common Stock 500,000 Retained Earnings 500,000 Total Liabilities & Equity $2,300,000 Instructions: Open the balances in the T-accounts (general ledger). Post the journal entries to the T-accounts (general ledger). Prepare an income statement, statement of retained earnings, balance sheet, and statement of...
Exam 2 Softbyte Inc. Balance Sheet December 31, 2012 Assets Cash $500,000 Accounts Receivable 700,000 Inventory...
Exam 2 Softbyte Inc. Balance Sheet December 31, 2012 Assets Cash $500,000 Accounts Receivable 700,000 Inventory 300,000 Property, Plant & Equipment 900,000 Accumulated Depreciation (100,000) Total Assets $2,300,000 Liabilities & Equity Accounts Payable $300,000 Notes Payable 1,000,000 Common Stock 500,000 Retained Earnings 500,000 Total Liabilities & Equity $2,300,000 Instructions: Open the balances in the T-accounts (general ledger). Post the journal entries to the T-accounts (general ledger). Prepare an income statement, statement of retained earnings, balance sheet, and statement of cash...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT