Sales are collected 50 in the month of sale 30 in the month

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Reference no: EM13577661

[The following information applies to the questions displayed below.]
The Gingham Company's budgeted income statement reflects the following amounts:

	Sales	Purchases	Expenses
January	$ 126,000	$ 84,000	$ 24,600
February	116,000	72,000	24,800
March	131,000	87,250	27,600
April	136,000	90,500	29,200

Sales are collected 50% in the month of sale, 30% in the month following sale, and 19% in the second month following sale. 1 percent of sales is uncollectible and expensed at the end of the year.
Gingham pays for all purchases in the month following purchase and takes advantage of a 3% discount. The following balances are as of January 1:

Cash	$ 94,000
Accounts receivable *	64,000
Accounts payable	78,000

*Of this balance, $38,400 will be collected in January and the remaining amount will be collected in February. The monthly expense figures include $5,600 of depreciation. The expenses are paid in the month incurred.

1.Gingham's expected cash balance at the end of January is:

	$91,800.
	$95,140.
	$97,400.
	$100,740.
	$119,740.

2.Gingham's budgeted cash receipts in February are:

	$95,800.
	$99,800.
	$120,490.
	$121,040.
	$121,400.

Reference no: EM13577661

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