Question
Karmee Company has been accumulating operating data in order to prepare annual profit plan. Details regarding Karmee's sales for the first six months of the
Karmee Company has been accumulating operating data in order to prepare annual profit plan. Details regarding Karmee's sales for the first six months of the coming year are as follows:
Estimated Monthly SalesType of Monthly Sale
January $600,000Cash Sales20%
February$650,000Credit sales80%
March$700,000
April$625,000
May$720,000
June$800,000
Collection Pattern for Credit Sales
Month of sale30%
One month following sale40%
Second month following sale25%
Karmee's cost of goods sold averages 40 percent of the sales value. Karmee's objective is to maintain a target inventory equal to 30 percent of the next month's sales. Purchases of merchandise for resale are paid for in the month following the sale.
The amount of cash collected in March for Karmee Company from the sales made during March will be
A. P140,000 C. P350,000
B. P308,000 D. P636,000
Karmee Company's total cash receipts for the month of April will be
A. P504,000 C. P653,000
B. P629,000 D. P707,400
The purchase of merchandise that Karmee Company will need to make during February will be
A. P254,000 C. P266,000
B. P260,000 D. P338,000
The amount for cost of goods sold that will appear on Karmee Company's pro form income statement for the month of February will be
A. P195,000 C. P260,000
B. P254,000 D. P272,000
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started