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Question - The following information pertains to Amigo Corporation:
Month
Sales
Purchases
July
$30,000
$10,000
August
34,000
12,000
September
38,000
14,000
October
42,000
16,000
November
48,000
18,000
December
60,000
20,000
Cash is collected from customers in the following manner:
Month of sale* 30%
Month following sale 50%
Two months following sale 15%
Amount uncollectible 5 %
* Customers paying in the month of sale receive a 2% cash discount.
40% of purchases are paid for in cash in the month of purchase, and the balance is paid the following month.
Required -
a. Summary of cash collections for the 4th quarter.
b. Summary of cash disbursements for the 4th quarter.
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