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The following information was available from ABC Company's financial records.

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

 

Required:   

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.      

Top Answer

Answer a) Cash collections for the month of August. = 85125 b) Cash... View the full answer

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