Reference no: EM132742200

Question - Kayapa Corporation is a retailer whose sales are all made on credit. Shipments are billed twice monthly: on the 10th of the month for the last half of the prior month's shipments and on the 20th of the month for the first half of the current month's shipments. The terms of all sales are 2/10, net 30. Based on past experience, collection of accounts receivables is as follows: Within the discount period = 80%; On the 30th day = 18%; Uncollectible = 2%. The sales value of forecasted shipments from May 2020 is as follows: May = 700,000; June = 800,000; July = 900,000; August = 900,000 and September = 600,000.

The average markup is 20% of the sales price. The company purchases merchandise for resale to meet the current month's shipment demand and to maintain a desired monthly ending inventory of 25% of the next month's shipments. All purchases are on credit with terms of net 30. The company pays for 1⁄2 of the month's purchase in the month of purchase and the other half in the month following the purchase.

Answer the following and show your solution:

a) How much receivables can the company expect to collect in June?

b) How much receivables can the company expect to collect in August?

c) How much can the company plan to collect in July from shipments made in July?

d) How much can the company plan to collect in September from shipments made in August?

e) How much can the company plan to collect in August from shipments made in September?

f) How much merchandise is the company planning to purchase during June?

g) How much is budgeted in August for the payment of merchandise?