Livanos, Inc. records all its sales as credit sales and pays cash operating costs in the...
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Livanos, Inc. records all its sales as credit sales and pays cash operating costs in the month incurred. Amounts for 2017 are given in the table that follows. Additional assumptions are: 1) Amounts due from customers are collected 40% in the month of sale and 60% in the following month; 2) The ratio of Cost of goods sold to Sales is 65%; 3) Livanos pays for inventory purchases 20% in the month of the purchase and 80% in the following month; 4) Monthly operating expenses are: Salaries, $60,000; Depreciation, $25,000; Rent, $20,000; and Utilities, $3,0003; 5) Accounts payable is only used for inventory acquisitions. Use the following worksheet to determine the ending cash balance in May, assuming the beginning cash balance in April is $180, 000. March April May June July Budgeted sales $400,000 $300,000 $280,000 $250,000 $500,000 Budgeted purchases $120,000 $112,000 $100,000 $200,000 $240,000 Cash Account April May Budget Debit Credit Debit Credit Sales March 400,000 Cash Collections are April 2$ 300,000 Debits to the Cash May $ 280,000 account June 250,000 July $ 500,000 Purchases Cash Disbursements March $ 120,000 are Credits to the April $ 112,000 Cash account May $ 100,000 June $ 200,000 July $ 240,000 Salaries $ 60,000 Rent $ 20,000 Depreciation $ 25,000 Utilities $ 30,000 Totals Net Increase (decrease) Opening Cash Balance 180,000 Ending Cash Balance %24 %24 Livanos, Inc. records all its sales as credit sales and pays cash operating costs in the month incurred. Amounts for 2017 are given in the table that follows. Additional assumptions are: 1) Amounts due from customers are collected 40% in the month of sale and 60% in the following month; 2) The ratio of Cost of goods sold to Sales is 65%; 3) Livanos pays for inventory purchases 20% in the month of the purchase and 80% in the following month; 4) Monthly operating expenses are: Salaries, $60,000; Depreciation, $25,000; Rent, $20,000; and Utilities, $3,0003; 5) Accounts payable is only used for inventory acquisitions. Use the following worksheet to determine the ending cash balance in May, assuming the beginning cash balance in April is $180, 000. March April May June July Budgeted sales $400,000 $300,000 $280,000 $250,000 $500,000 Budgeted purchases $120,000 $112,000 $100,000 $200,000 $240,000 Cash Account April May Budget Debit Credit Debit Credit Sales March 400,000 Cash Collections are April 2$ 300,000 Debits to the Cash May $ 280,000 account June 250,000 July $ 500,000 Purchases Cash Disbursements March $ 120,000 are Credits to the April $ 112,000 Cash account May $ 100,000 June $ 200,000 July $ 240,000 Salaries $ 60,000 Rent $ 20,000 Depreciation $ 25,000 Utilities $ 30,000 Totals Net Increase (decrease) Opening Cash Balance 180,000 Ending Cash Balance %24 %24
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Related Book For
Government and Not for Profit Accounting Concepts and Practices
ISBN: 978-1118983270
7th edition
Authors: Michael Granof, Saleha Khumawala, Thad Calabrese, Daniel Smith
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