Reference no: EM132996267
Question - The next three questions are based on the KAYE, Inc. a retailer whose sales are all made in credit. Sales are billed twice monthly on the 10th of the month for the last half of the prior month's sales, and on the 20th of the month for the first half of the current month's sales. The terms of all sales are 2/10, n/30. Based upon past experience, the collection of accounts receivable is as follows:
Within the discount period 80%
On the 30th day 18%
Uncollectible 2%
The sales value of shipments for May and the forecasts for the next four months follows:
May (actual) P500,000
June 600,000
July 700,000
August P700,000
September 400,000
KAYE 's average markup on its products is 20% of the sales price. All sales and purchases occur uniformly throughout the month.
KAYE'S purchases merchandise for resale to meet the current month's sale demand and to maintain desired monthly ending inventory of 25% of the next month's sales. All purchases are on credit with terms of net/30. KAYE pays for 50% of a month's purchases and 50% in the month following the purchases.
1. How much cash can KAYE collect from receivables during July? a. P794,000 b. P801,400 c. P815,000 d. P842,600
2. How much cash will be collected in September from sales made in August? a. P337,000 b. P400,400 c. P433,800 d. P441,000
3. The budgeted peso value of KAYE's inventory on August 31 will be a. P120,000 b. P130,000 c. P150,000 d. P180,000
4. How much merchandise should the company plan to purchase during June? a. P620,000 b. P650,000 c. P660,000 d. P680,000
5. The amount of payments for the month of August is: a. P660,000 b. P690,000 c. P720,000 d. P780,000