Question

Question 6: Master Budgeting • Time: 40 minutes Total: 24 marks The following information pertains to Stark Corporation Jan Feb Mar Apr May June $30,000 34,000 38.000 42.000 48.000 60,000 $10,000 12.000 14.000 16.000 18.000 20,000 Cash is collected from customers in the following manner 30% Month of sale Month following sale Two months following sale Amount uncollectible SOX 15% 5% * 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. marks)

Answer 1

Answer-

	April	May	June
February	$5,100 ($34,000*15%)
March	$19,000 ($38,000*50%)	$5,700 ($38,000*15%)
April	$12,348 ($42,000*30%-2%*30%*$42,000)	$21,000 ($42,000*50%)	$6,300 ($42,000*15%)
May		$14,112 ($48,000*30%-2%*30%*$48,000)	$24,000 ($48,000*50%)
June			$17,640 ($60,000*30%-2%*30%*$60,000)
Total	$36,448	$40,812	47,940

Total Cash Collection= April $36,448+ May $40,812+ June $47,940= $125,200