Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On December 31,2004 , DEF Corp had an Accounts Receivable balance of $50,000 and a Cash balance of $100,000. Credit Sales for January and February

image text in transcribed

image text in transcribed

On December 31,2004 , DEF Corp had an Accounts Receivable balance of $50,000 and a Cash balance of $100,000. Credit Sales for January and February were $90,000 and $150,000 respectively. All of DEF???s sales are credit sales which are collected evenly over a two month period. Experience has shown that 2% of all credit sales are uncollectible. DEF had an Accounts Payable balance of $20,000 on December 31,2004 . DEF is a merchandising concern, which sells a single product which it purchases for $2 per unit. The product sells for $10 per unit. DEF???s policy is to have sufficient inventory on hand at the start of any month to cover 150% of that month???s sales. DEF typically pays for its purchases as follows: 80% in the month of purchase. 20% in the month following the purchase. DEF deals with a single supplier, who does not provide the company with any discount for early payment of any outstanding invoices. March sales were forecast to be 30,000 units. What would be DEF???s cash balanci at the end of January? March sales were forecast to be 30,000 units. What would be DEF???s cash balance at the end of January? $169,550 $189,550 $149,550 $180,000

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Contemporary Auditing E4 Im

Authors: KNAPP

4th Edition

0324048602, 978-0324048605

More Books

Students also viewed these Accounting questions

Question

2. Describe why we form relationships

Answered: 1 week ago

Question

5. Outline the predictable stages of most relationships

Answered: 1 week ago