Compute the expected cash collections in December

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Reference no: EM132759421

Question - Fido Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow:

Sales are budgeted at $220,000 for November, $200,000 for December, and $210,000 for January.

Collections are expected to be 70% in the month of sale, 27% in the month following the sale, and 3% uncollectible.

The cost of goods sold is 65% of sales.

The company desires to have an ending merchandise inventory at the end of each month equal to 50% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase.

Required -

A. Compute the expected cash collections in December?

B. Compute the December cash disbursements for merchandise purchases?

Reference no: EM132759421

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