Question
Katniss operates an archery supplies store. Her sales revenue is as shown below. We anticipate that 75% of our customers pay cash; of the credit
Katniss operates an archery supplies store. Her sales revenue is as shown below. We anticipate that 75% of our customers pay cash; of the credit sales, 80% pay their account in the month of sale, 15% pay in the month following sale and 5% in the month after that.
Sales:
Jan $10,000
Feb $18,000
Mar $20,000
April $21,000
May $20,000
June $28,000
July $26,000
Aug $25,000
We also have the following expenses (below). Salaries are paid in cash in the month incurred. Our suppliers allow us 60 days to pay. As a result, purchases of product are paid in full (in cash) the second month following purchase. There are no discounts.
MONTH | Salaries | Product |
Jan | 3,000 | 8,000 |
Feb | 3,000 | 12,000 |
Mar | 3,000 | 9,000 |
Apr | 3,000 | 10,000 |
May | 3,000 | 12,000 |
June | 3,000 | 12,000 |
July | 3,500 | 12,000 |
Aug | 3,500 | 18,000 |
What is the total cash collected (from all sources) in April?
How much cash is paid out (for all items) in March?
Assume that Katniss began January with a zero balance in Accounts Payable. What is her Accounts Payable balance at the end of April?
For this question, assume Katniss had no sales in November or December of last year and that she had a zero Accounts Receivable balance at January 1.
What is her Accounts Receivable balance at the end of January?
For this question, assume Katniss had no sales in November or December of last year and that she had a zero Accounts Receivable balance at January 1.
What is her Accounts Receivable balance at the end of February?
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