Question

Goldberg Company is a retail sporting goods store that uses an accrual accounting system. Facts regarding its operations foll(For all requirements, Do not round intermediate calculations.) 1. Budgeted cash collections—December 2. Net accounts receiva

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Answer #1

Answer:

1.)
Cash Collections for December = Accounts Receivable + 50% * December Sales
Cash Collections for December = $76,000 + 50% * $330,000
Cash Collections for December = $76,000 + $165,000
Cash Collections for December = $241,000

2.)
Bad Debt Expense for December = 2% * December Sales
Bad Debt Expense for December = 2% * $330,000
Bad Debt Expense for December = $6,600

Accounts Receivable at the End of December = 48% * December Sales
Accounts Receivable at the End of December = 48% * $330,000
Accounts Receivable at the End of December = $158,400

3.)
December Gross Profit = 30% * December Sales
December Gross Profit = 30% * $330,000
December Gross Profit = $99,000

4.)
Income before Taxes for December = Gross Profit - Bad Debt Expense - Other Cash Operating Expense - Depreciation
Income before Taxes for December = $99,000 - $6,600 - $26,400 - $19,500
Income before Taxes for December = $46,500
.
5.)
Budgeted Ending Inventory for December = 80% * January Sales
Budgeted Ending Inventory for December = 80% * $300,000
Budgeted Ending Inventory for December = $240,000

5.)
Budgeted Purchases for December = Budgeted Sales + Budgeted Ending Inventory - Beginning Inventory
Budgeted Purchases for December = $330,000 + $240,000 - $184,800
Budgeted Purchases for December = $385,200

6.)
Accounts Payable at the End of December = Budgeted Purchases
Accounts Payable at the End of December = $385,200

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