Problem 1 (6 Marks): The following information pertains to Amigo Corporation:

Month Sales Purchases

July $30,000 $10,000

August 34,000 12,000

September 38,000 14,000

October 42,000 16,000

November 48,000 18,000

December 60,000 20,000

Cash is collected from customers in the following manner:

Month of sale* 30%

Month following sale 50%

Two months following sale 15%

Amount uncollectible 5 %

* Customers paying in the month of sale receive a 2% cash discount.

40% of purchases are paid for in cash in the month of purchase, and the balance is paid the following month.

Required:

a summary of cash collections for the 4th quarter.

b. summary of cash disbursements for the 4th quarter.