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?