The following information was available from ABC Company's financial records. Sales Purchases
April $90,000 $52,500
May $82,500 $60,000
June $75,000 $45,000
July $97,500 $67,500
August $82,500 $75,000
Collections from customers are as follows:
Month of sale 75%
One month following sale 20%
Second month following sale 5%
On the purchase side, the Company takes full advantage of the 3 percent discount allowed on purchases paid for by the tenth of the following month. (Hint: April purchases are paid in full in May by taking advantage of the discount.)
Additional information for the month of August is as follows:
Cash disbursements for administrative expenses $18,000
Amortization expenses $6,250
Cash balance on August 1 $27,500
a) Compute the cash collections for the month of August. b) Compute the cash disbursements for the month of August. c) Compute the cash balance on August 31.
d) Compute accounts receivable at August 31.
e) Compute accounts payable at August 31.
Answer a) Cash collections for the month of August. = 85125 b) Cash... View the full answer