Calculate the net accounting profit for December. Calculate the net cash flow for December. Comment on the difference between the two previous answers.
Calculate the net accounting profit for December. Calculate the net cash flow for December. Comment on the difference between the two previous answers.
Chapter7: Budgeting
Section: Chapter Questions
Problem 11EB: Gear Up Co. pays 65% of its purchases in the month of purchase, 30% in the month after the purchase,...
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Question
MNO Company's credit sales policy is to have:
- 50% of the sales amount in cash
- 30% collected after one month
- 20% after two months.
- The purchasing policy is to pay 60% in cash and the rest is to be paid after one month.
Required:
- Calculate the net accounting profit for December.
- Calculate the net cash flow for December.
- Comment on the difference between the two previous answers.
Item |
October |
November |
December |
Sales |
400,000 |
350,000 |
450,000 |
Purchases |
350,000 |
340,000 |
420,000 |
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