Question
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
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 (2% cash discount) 30%
Month following sale 50%
Two months following sale 15%
Amount uncollectible 5%
40% of purchases are paid for in cash in the month of purchase, and the balance is paid the following month.
Required:
a. Prepare a summary of cash collections for the 4th quarter.
b. Prepare a summary of cash disbursements for the 4th quarter.
The solution for the problem:
a. Cash collections Oct $36,448 + Nov $40,812 + Dec $47,940 = $125,200
October November December
August $ 5,100
September 19,000 5,700
October 12,348 21,000 6,300
November 14,112 24,000
December 17,640
-------- --------- --------
$36,448 $40,812 $47,940
b. Cash disbursements Oct $14,800 + Nov $16,800 + Dec $18,800 = $50,400
October November December
September 8,400
October 6,400 9,600
November 7,200 10,800
December 8,000
-------- --------- --------
$14,800 $16,800 $18,800
Could you provide the working notes from the beginning?
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Accounting Information Systems
Authors: Marshall B. Romney, Paul J. Steinbart
13th edition
978-0133428537
