Question

In: Accounting

The following information pertains to Amigo Corporation:       Month                        Sales &

The following information pertains to Amigo Corporation:

      Month                        Sales         Purchases

      July                         $30,000             $10,000

      August                      34,000               12,000

      September                 38,000               14,000

      October                     42,000               16,000

      November                 48,000               18,000

      December                  60,000               20,000

?           Cash is collected from customers in the following manner:

            Month of sale (2% cash discount)     30%

            Month following sale                       50%

            Two months following sale              15%

            Amount uncollectible                        5%

?     40% of purchases are paid for in cash in the month of purchase, and the balance is paid the following month.

Required:

a.   Prepare a summary of cash collections for the 4th quarter.

b.   Prepare a summary of cash disbursements for the 4th quarter.

Solutions

Expert Solution

Summary of Cash Collection

October

November

December

(A) Sales

$ 42,000.00

$ 48,000.00

$ 60,000.00

(B) Collection in Current Month Before Cash Discount

$ 12,600.00

$ 14,400.00

$ 18,000.00

(C )Less Cash Discount

$        252.00

$        288.00

$        360.00

(D=B-C) Net Collection For Current Month Sale

$ 12,348.00

$ 14,112.00

$ 17,640.00

(E) Collection for July

$                 -  

$                 -  

$                 -  

(F) Collection for August

$    5,100.00

$                 -  

$                 -  

(G) Collection for September

$ 19,000.00

$    5,700.00

$                 -  

(H) Collection for October

$                 -  

$ 21,000.00

$    6,300.00

(I) Collection for November

$                 -  

$                 -  

$ 24,000.00

(J=D+E+F+G+H+I)Total Collection

$ 36,448.00

$ 19,812.00

$ 17,640.00

Summary of Cash Disbursements

October

November

December

(A) Purchases

$ 16,000.00

$ 18,000.00

$ 20,000.00

(B) Payment for Current Month

$    6,400.00

$    7,200.00

$    8,000.00

(C ) Payment for Previous Month

$    8,400.00

$    9,600.00

$ 10,800.00

(D=B+C) Total cash Disbursement

$ 14,800.00

$ 16,800.00

$ 18,800.00

Working Notes

Working for Cash Collection

July

August

September

October

November

December

(A) Sales

$ 30,000.00

$ 34,000.00

$ 38,000.00

$ 42,000.00

$ 48,000.00

$ 60,000.00

(B) Collection in Current Month Before Cash Discount

$    9,000.00

$ 10,200.00

$ 11,400.00

$ 12,600.00

$ 14,400.00

$ 18,000.00

(C )Less Cash Discount

$        180.00

$        204.00

$        228.00

$        252.00

$        288.00

$        360.00

(D=B-C) Net Collection For Current Month Sale

$    8,820.00

$    9,996.00

$ 11,172.00

$ 12,348.00

$ 14,112.00

$ 17,640.00

(E) Collection for July

$ 15,000.00

$    4,500.00

$                 -  

$                 -  

$                 -  

(F) Collection for August

$ 17,000.00

$    5,100.00

$                 -  

$                 -  

(G) Collection for September

$ 19,000.00

$    5,700.00

$                 -  

(H) Collection for October

$                 -  

$ 21,000.00

$    6,300.00

(I) Collection for November

$                 -  

$                 -  

$ 24,000.00

(J=D+E+F+G+H+I)Total Collection

$ 36,448.00

$ 19,812.00

$ 17,640.00

Working for Cash Disbursements

July

August

September

October

November

December

(A) Purchases

$ 10,000.00

$ 12,000.00

$ 14,000.00

$ 16,000.00

$ 18,000.00

$ 20,000.00

(B) Payment for Current Month

$    4,000.00

$    4,800.00

$    5,600.00

$    6,400.00

$    7,200.00

$    8,000.00

(C ) Payment for Previous Month

$    6,000.00

$    7,200.00

$    8,400.00

$    9,600.00

$ 10,800.00

(D=B+C) Total cash Disbursement

$    4,000.00

$ 10,800.00

$ 12,800.00

$ 14,800.00

$ 16,800.00

$ 18,800.00

ekkarill92 answered 1 year ago
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