QUESTION 1
Anglo Foods Inc., has the following forecasted sales for 2018:
January |
February |
March |
April |
May |
June |
July |
$200,000 |
$350,000 |
$420,000 |
$350,000 |
$270,000 |
$200,000 |
$300,000 |
Actual sales in November and December 2017 were $375,000 and 266,667, respectively. 60% of sales are on credit (i.e. 40% of sales will be received in cash in the same month). The firm collects 60% of these credit sales (i.e., 60%*60% = 36% of sales) during the first month after the sale and the remainder (i.e. 40% of credit sales and thus 40%*60% = 24% of sales) during the following second month.
For example, for the January sales of $200,000, 40% (i.e. $80,000) will be received in cash in January, 36% (i.e. $72,000) will be received in cash in February, and the rest ($48,000) will be received in cash in March.
Here are the information about the cash expenditures.
For example, January purchases will be 60% of February sales, i.e., $350,000*60%=$210,000. The company pays 50% of it ($105,000) in cash in February, and the rest in March.
The company needs a minimum cash balance of $25,000. The beginning cash balance is $30,000.
Using the Bithlo Barbecues’ simple cash budget example from Chapter 4, prepare their cash budget for January to June 2018.
Answer Q (1-5) based on the cash budget you have prepared.
a |
$168,000 |
|
b |
$126,000 |
|
c |
$342,000 |
|
d |
$400,000 |
The cash collection of March sales will be as follows :
Amount | |
cash sales | 420000*40%= 168000 |
credit sales | |
April | 420000*36%= 151200 |
May | 420000*24%= 100800 |
Total | 420000 |
company’s cash collection in March from the March sales of $420,000 = $ 168000
correct option is "a"- 168000
QUESTION 1 Anglo Foods Inc., has the following forecasted sales for 2018: January February March April...
QUESTION 1 Anglo Foods Inc., has the following forecasted sales for 2018: January February March April May June July $200,000 $350,000 $420,000 $350,000 $270,000 $200,000 $300,000 Actual sales in November and December 2017 were $375,000 and 266,667, respectively. 60% of sales are on credit (i.e. 40% of sales will be received in cash in the same month). The firm collects 60% of these credit sales (i.e., 60%*60% = 36% of sales) during the first month after the sale and the...
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