MANAGERIAL ACCOUNTING REVISED EXAM 2 REVIEW 16 WITH SOLUTIONS 100%

5. Assume the Task Company charges 1 1/2% on any balance that is not collected in the month following the month of sale. This charge will also change the collection percentages to 15% cash sales, 80% of the balance collected in the month following the sale, 16% the second month, 3% the third month. This stricter credit policy will reduce the estimated sales budgets by 7% each month. What is the amount of cash to be collected in July? A. $39,199 B. $35,312 C. $38,193 D. $36,242 $42,000  .93 = $39,060; $40,000  .93 = $37,200; $34,000  .93 = $31,620; $30,000  .93 = $27,900; ($39,060  .15) + ($37,200  .85  .80) + ($31,620  .85  .16  1.015) + ($27,900  .85  .03  1.015) = $36,242 Carpon Lumber sells lumber and general building supplies to building contractors in a medium-sized town in Montana. Data regarding the store's operations follow:  Collections are expected to be 55% in the month of sale, 44% in the month following the sale, and 1% uncollectible.  The cost of goods sold is 75% of sales.  The company desires to have an ending merchandise inventory equal to 60% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase.  Other monthly expenses to be paid in cash are $21,100.  Monthly depreciation is $19,000.  Ignore taxes. 6. The net income for December would be: A. $66,400 B. $43,900 C. $44,400 D. $61,500 10% of the beginning inventory is 35,000, so the sales is 35,000/10% = 350,000 for December. 7. The difference between cash receipts and cash disbursements in December would be: A. $61,500 B. $62,050 C. $60,300 D. $65,400