Question

The following data have been extracted from the financial statements of Prentiss, Inc., a calendar-year merchandising corporation:


• Total sales for 2015 were $1,200,000 and for 2014 were $1,100,000. Cash sales were 20% of total sales each year.
• Cost of goods sold was $840,000 for 2015.
• Variable general and administrative (G&A) expenses for 2015 were $120,000. These expenses have varied in proportion to sales and have been paid at the rate of 50% in the year incurred and 50% the following year. Unpaid G&A expenses are not included in accounts payable.
• Fixed G&A expenses, including $35,000 depreciation and $5,000 bad debt expense, totaled $100,000 each year. The amount of such expenses involving cash payments was paid at the rate of 80% in the year incurred and 20% the following year. In each year, there was a $5,000 bad debt estimate and a $5,000 write-off. Unpaid G&A expenses are not included in accounts payable.

Required:
Compute the following:
1. The amount of cash collected during 2015 that resulted from total sales in 2014 and 2015.
2. The amount of cash disbursed during 2015 for purchases of merchandise.
3. The amount of cash disbursed during 2015 for variable and fixed G&A expenses.



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  • CreatedSeptember 10, 2014
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