Question

# LO 4 Joshua Studios expects the following sales in March, April, and May: Cash Sales Credit...

LO 4 Joshua Studios expects the following sales in March, April, and May:

Cash Sales

Credit Sales

March

\$55,000

\$240,000

April

50,000

250,000

May

75,000

300,000

The controller has determined that the company collects credit sales in the following pattern: 30% in the month of sale, 50% in the first month after sale, 10% in the second month after sale, and 10% uncollectible. How much cash will be collected from customers in May?(a)

\$ 75,000

(b)

\$239,000

(c)

\$290,000

(d)

\$314,000

LO 4 Sleep Systems, Inc. budgeted the following selling and administrative expenses for July:

 Utilities \$8,500 Advertising 675 Office equipment depreciation 1,230 Supplies 530 Bad debts 1,920

How much will Sleep Systems, Inc. show on its July cash budget for selling and administrative expenses?(a)

\$12,855

(b)

\$11,625

(c)

\$9,705

(d)

\$3,150

LO 4 Marvin's Garden Supply is preparing its cash budget for the fourth quarter. The inventory manager has provided the following budgeted materials purchases amounts: October—\$58,000, November—\$80,000, December—\$74,000. Historically, Marvin's has paid for 20% of its purchases in the month of purchase, 70% in the month following the purchase, and 10% in the second month after the purchase. What is Marvin's budgeted cash payments for purchases in December?

(a)

\$80,000

(b)

\$76,600

(c)

\$74,000

(d)

\$56,000

#### Homework Answers

Answer #1
 1 May Cash Sales 75000 Credit sales: From March sales 24000 =240000*10% From April sales 125000 =250000*50% From May sales 90000 =300000*30% Cash collected from customers in May 314000 Option D is correct 2 Utilities 8500 Advertising 675 Supplies 530 Amount of Cash for selling and administrative expenses 9705 Option C is correct Note: Office equipment depreciation and Bad debts is non cash expense 3 December For October purchases 5800 =58000*10% For November purchases 56000 =80000*70% For December purchases 14800 =74000*20% Budgeted cash payments for purchases in December 76600 Option B is correct
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