Question

Type

The following information pertains to Stark Corporation

Month

Jan

Feb

Mar

Apr

May

June

sales and Purchases

$30,000    $10000

34,000 12000

38,000 14000

42,000    16000

48,000    18000

60,000 20000

Cash is collected from customers in the following manner

30% Month of sale*

50% Month following sale

15% Two months following sale

5% Amount uncollectible

*Customers paying in the month of sale receive a 2% cash discount.

40% of purchases are paid for in cash in the month of purchase, and the balance is paid the

following month.

Prepare a summary of cash collections for the 2nd quarter.

Answer 1

Please find below table useful to compute desired results: -

А B 2 April 3 February =34000*15% 4 March =38000*50% 5 April =42000*30%-42000*30%*2% 6 May 7 June 8 Total =SUM(B3:B7) Summary of Cash Collections for the 2nd Quarter May June Total Cash Collection =SUMB3-D3) =38000*15% =SUM(B4:D4) -42000*50% =42000*15% =SUM(B5:D5) =48000*30%-48000*30%*2% =48000*50% =SUM(B6:D6) =60000*30%-60000*30%*2% 1=SUM(B7-D7) =SUM(C3-C7) =SUMD3:07) =SUM(B8-D8) 10 Total Cash Collection for 2nd quarter =ES

End results would be as follows: -

A B C D Summary of Cash Collections for the 2nd Quarter 2 April May June Total Cash Collection 3 February 5.100 5.100 4 March 19,000 5,700 24,700 5 April 12,348 21.000 6,300 39,648 6 May 14.112 24.000 38,112 7 June 17.640 17,640 8 Total 36,448 40,812 47,940 125,200 9 10 Total Cash Collection for 2nd quarter 125,200