Question
The Winner Company marks up all merchandise at 25% of gross purchases. All purchases are made on account with terms 1/10 n/60.Purchase discounts which are
The Winner Company marks up all merchandise at 25% of gross purchases.
All purchases are made on account with terms 1/10 n/60.Purchase discounts which are recorded as miscellaneous income are always taken.Normally, 60% of each month's purchases are paid for in the month of purchase while the 40% are paid during the first 10 days of the first month after the purchase.Inventories of merchandise at the end of each month are kept at 30% of the next month projected cost of sales.
Terms of sales on account are 2/10, n/30.Cash sales are not subject to discount.50% of each month's sales on account are collected during the month of sales: 45% are collected in succeeding month and the remainder are usually uncollectible: 70% of the collections in the month of sale are subject to discount while 10% of the collection in the succeeding month are subject to discount.
Projected sales data for selected months follow:
MonthSales on acct.-gross Cash sales
DecemberP1,900,000P 400,000
January1,500,000250,000
February1,700,000350,000
March1,600,000300,000
14.Projected gross purchases at the end of January is:
15.Projected inventory at the end of Decemberis:
16. Projected payments to suppliers during February are:
17.Projected sales discounts to be taken by customers making remittance during February:
18. Projected collections from customers during Februaryare:
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