Question

The next four questions are based on the following information: Coco Chips Company, a retail store, prepares its master budget on a quarterly basis. The budget officer has gathered the following data: a. Budgeted Sales for the next three months Cash Sales Credit Sales April $ 20,000 $ 359,000 May $ 30,000 $ 548,000 June $ 24,000 S 437,000 b. The company expects to collect 50% of credit sales in the month of sales, 48% in the month following the sales, and 2% to be uncollectible. The company recognizes bad debt expenses in the month sales are made. c. The company's gross margin is 40% of sales. d. The ending merchandise inventory should be 20% of the following month's cost of goods sold. e. Payment for merchandise purchases is expected to be 60% in the month of purchase and 40% paid in the following month. f. Monthly selling and administrative expenses to be paid in cash are $35.000 8. Monthly depreciation expense is $10,000 h. The company will declare 55,000 cash dividend in April, which will be paid in May. 9 What is the net accounts receivable balance of Coco Chips as of May 31? $209,760 $263,040 $274,000 $277.440 E. None of the above 10 How much is the cost of merchandise purchase in May? $221,840 $251.280 S315,480 5332,760 E. None of the above
Just 10. Cost of Merchandise Purchase.

Answer 1

9) Account receivable at May 31 = 548000*48% = 263040

So answer is b) $263040

10) Cost of merchandise purchase = (578000*60%)+(461000*60%*20%)-(578000*60%*20%) = $332760

So answer is d) $332760