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3) The following information pertains to Amigo Corporation:       Month    ...

3) The following information pertains to Amigo Corporation:

      Month                        Sales         Purchases

      July                         $30,000             $10,000

      August                      34,000               12,000

      September                 38,000               14,000

      October                     42,000               16,000

      November                 48,000               18,000

      December                  60,000               20,000

•    Cash is collected from customers in the following manner:

      Month of sale                                        40%

      Month following sale                             40%

      Two months following sale                    20%

     

•    60% of purchases are paid for in cash in the month of purchase, and the other 40% is paid the following month.

Required: Complete the cash budget for the 4th quarter.

                                     October                                            November                        December

Beginning Balance:             $10,000

     

Cash Collections from:

      August                              

      September                                                       

      October                                                                                          

      November                                                                                      

      December                                                                                      

                                   ---------------                                            ---------------                        -----------------

Total Cash Collections             

Total Cash Available  

Cash Payments from:

      September                         

      October                                                           

      November                                                                                      

      December                                                                                      

                                --------------                                          ----------------                        -------------------

Total Cash Payments                                             

Ending Cash Balance

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Answer #1

Answer -

AMIGO CORPORATION

Cash Budget for the quarter ending December

October ($) November ($) December ($)
Beginning Balance

10000

[Given]

33600

[Ending cash balance of

previous month]

60000

[Ending cash balance of

previous month]

Cash Collections from -

August

6800

[34000*20%]

 - -

September

15200

[38000*40%]

7600

[38000*20%]

 -

October

16800

[42000*40%]

16800

[42000*40%]

8400

[42000*20%]

November

 -

19200

[48000*40%]

19200

[48000*40%]

December

 - -

24000

[60000*40%]

Total cash collections

38800

[6800+15200+16800]

43600

[7600+16800+19200]

51600

[8400+19200+24000]

Total Cash Available

48800

[38800+10000]

77200

[43600+33600]

111600

[51600+60000]

Cash payments for -
September

5600

[14000*40%]

-

 -
October

9600

[16000*60%]

6400

[16000*40%]

 -
November -

10800

[18000*60%]

7200

[18000*40%]
December - -

12000

[20000*60%]

Total Cash Payments

15200

[5600+9600]

17200

[6400+10800]

19200

[7200+12000]

Ending Cash Balance

33600

[48800-15200]

60000

[77200-17200]

92400

[111600-19200]
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