Question
Deco-Bella Furniture PLC (DBF) is a retail business that has established its first store in Horsham and expanded to multiple Australian cities. The store has
Deco-Bella Furniture PLC (DBF) is a retail business that has established its first store in Horsham and expanded to multiple Australian cities. The store has currently signed a contract with various furniture manufacturers to purchase quality products and retails them at competitive price. Customers of DBF are located throughout Australia. Fifty percent of sales are collected in the month of sales; thirty percent is collected in the first month following sales and the remaining twenty percent is collected in the second month after sales. Purchases are normally paid off in the first week of the month following purchases. DBF has never missed a discount of 2% on purchases. Other monthly cash expenses for operating activities (other than purchases) are $14,500. Data regarding purchases and sales for four months of 2020 are given below.
Month | Purchases | Sales Revenue |
January | $60,000 | $128,000 |
February | $70,000 | $136,000 |
March | $65,000 | $126,000 |
April | $64,000 | $124,000 |
Required: (show step-by-step computations for each requirement)
1. Calculate the total cash collections for the month of March.(2.5 marks)
2. Determine the amount of cash payments in the month of March.(2.5 marks)
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