Managerial Accounting: Creating Value in a Dynamic Business Environment
12th Edition
ISBN: 9781260417074
Author: HILTON, Ronald
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 9, Problem 29E
Handy Hardware is a retail hardware store. Information about the store’s operations follows.
- November 20x1 sales amounted to $200,000.
- Sales are budgeted at $220,000 for December 20x1 and $200,000 for January 20x2.
- Collections are expected to be 60 percent in the month of sale and 38 percent in the month following the sale. Two percent of sales are expected to be uncollectible.
Bad debts expense is recognized monthly. - The store’s gross margin is 25 percent of its sales revenue.
- A total of 80 percent of the merchandise for resale is purchased in the month prior to the month of sale, and 20 percent is purchased in the month of sale. Payment for merchandise is made in the month following the purchase.
- Other monthly expenses paid in cash amount to $22,600.
- Annual depreciation is $216,000.
The company’s balance sheet as of November 30, 20x1, is as follows:
Required: Compute the following amounts.
- 1. The budgeted cash collections for December 20x1.
- 2. The budgeted income (loss) before income taxes for December 20x1.
- 3. The projected balance in accounts payable on December 31, 20x1.
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Marlin Company projects the follwoing sales for the first thre months of the year: $11500 in January; $10100 in February and $10400 in March. the company expects 60% of the sales to be cash and the remainder on accounts. Sales on account are collected 50% in the month of the sale and 50% in the following month. The Account Receivable account has a zero on January.
1. Prepare a schedule of cash receipts for Marlin for January, February and March. What is the balance in Accounts Receivable on March 31?
2. Prepare a revised schedule of cash receipts if receipts from sales on account are 70% in the month of the sale, 20% in the following month of the sale and 10% in the second month of the sale. What is the balance in Accounts Receivable on March 31?
Marcel Company projects the following sales for the first three months of the year: $13,500 in January; $12,200 in February, and $10,500 in March. The company expects 60% of the sales to be cash
and the remainder on account Sales on account are collected 50% in the month of the sale and 50% in the following month. The Accounts Receivable account has a zero balance on January 1. Round
to the nearest dollar.
Read the requirements.
Requirements
1. Prepare a schedule of cash receipts for Marcel for January, February, and
March. What is the balance in Accounts Receivable on March 31?
2. Prepare a revised schedule of cash receipts if receipts from sales on account
are 60% in the month of the sale, 30% in the month following the sale, and
10% in the second month following the sale. What is the balance in Accounts
Receivable on March 31?
Ouruary CASH SHIVJ
Print
March-Cash sales
February-Credit sales, collection of February sales in February
February-Credit sales, collection of February sales…
Avery Company projects the following sales for the first three months of the year: $13,500 in January; $15,900 in February; and $15,800 in March. The company expects 80% of the sales to be cash and the remainder on account. Sales on account are collected 50% in the month of the sale and 50% in the following month. The Accounts Receivable account has a zero balance on January 1. Round to the nearest dollar.
Prepare a schedule of cash receipts for Avery for January, February, and March. What is the balance in Accounts Receivable on March 31?
Chapter 9 Solutions
Managerial Accounting: Creating Value in a Dynamic Business Environment
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