In-class exercise_March 23_Nordic Company

In-class exercise_March 23_Nordic Company - In-class...

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In-class exercise, March 23, Nordic Company (Problem 9-17)                                            As of March 31 (the end of the prior quarter), the company's balance sheet showed the following account balances:  Actual sales for December and budgeted sales for January-April are as follows: March (actual) April May June July Sales $60,000 $70,000 $85,000 $90,000 $50,000 Sales are 20% for cash and 80% on credit. All payments on credit sales are collected in the month following the sale. The accounts receivable  of $48,000 at March 31 are a result of March credit sales. 1.Schedule of expected cash collections:     April May June Quarter Cash sales. .......... $14,000 Credit sales. ......... 48,000 Total collections. ... $62,000 1
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Nordic Company (cont’d) March (actual) April May June July Sales $60,000 $70,000 $85,000 $90,000 $50,00 0 The company's gross margin percentage is 40% of sales. In other words, cost of goods sold is 60% of  sales. Each month's ending inventory should equal 30% of the following month's cost of goods sold. 2. a. Merchandise purchases budget:     April May June Quarter Budgeted cost of goods sold  (60% of sales). ................... $42,000 $51,000 Add desired ending  inventory. ........................... 15,300 Total needs. .......................... 57,300 Less beginning inventory. ..... 12,600 Required purchases. ............ $44,700 2
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Nordic Company (cont’d) Half of a month's inventory purchases are paid for in the month of purchase and half in the following 
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This note was uploaded on 04/02/2009 for the course BUAD 250B taught by Professor Jackson during the Spring '07 term at USC.

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In-class exercise_March 23_Nordic Company - In-class...

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