Applies to Acapulco Store $$ an export$/$import business. 

 

Sales are $40\%$ cash and $60\%$ credit.

Of the credit sales, $75\%$ are collected in the first month following the sales and $25\%$ in the second month following the sale.

The gross profit margin on sales averages $20\%.$

All inventory purchases are paid during the month in which they are made.

A basic inventory of P$10,000$ is constantly maintained, and the store follows the policy of purchasing enough additional inventory to cover the following month$$s sales.

The store maintains a minimum cash balance of P$2,000.$

Accrued wages remain unchanged.

Balance Sheet, September $30,2010$

Cash

P $5,100$

Accrued Wages & Sal.

P $600$

Accounts Receivable

$14,700$

Other Liabilities

$2,000$

Inventory

$26,000$

Capital

$59,200$

Furniture and Fixture

$20,000$

Accumulated Dep$$n

$(4,000)$

Total Assets

P $61,800$

Total Liabilities& Equity

P $61,800$

Past Sales: August P$18,000$; September P$20,000$

Sales Budget

October

P $20,000$

November

$26,000$

December

$24,000$

Monthly Expenses

Wages and Salaries

October

P $1,400$

November

$1,600$

Rent: P$400/$month

Depreciation: P$150/$month for old furniture and fixtures

Other Expenses: $10\%$ of sales

Required:

Project the balance sheet and income statement for October and November. Present all pertinent solutions. Find the current ratio, acid test ratio, and debt$-$equity ratio.