Answer:
a
The cash receipts in October are as follows:
Cash Sales:
85% of $157,000
= 0.85 * $157,000
= $133,450
Payments on September credit sales:
$181,500 * 28% * (80 - 75)%
= $181,500 *0.28 * 15%
= $181,500 * 0.28 * 0.15
= $7,623
Payments on October credit sales** 16,485
$157,000 * 70% * (85 - 70)%
$157,000 * 0.7 * 15%
= $157,000 * 0.7 * 0.15
= $16,485
Total cash expected = $133,450 + $7,623 + $16,485 = $157,558
b.
Payments for food purchases is as follows:
September
($130,000 × 0.75) = $97,500
October
($116,000 × 0.25) = 29,000
Total cash needed for June = $97,500 + $29,000 = $126,500
c.
The inventory is as follows:
Beginning balance $2,147
Cash receipts $157,558
Cash available $159,705
The following items will be subtracted:
Food purchases $126,500
Shareholder's Dividend $6,000
Workers’ wages in September $730 ---- 10% of $7,300
Workers’ wages re: October $6,570 --- 90% of $7,300
Utilities $5,590
Insurance $1,200
Rent $4,100
Total disbursements $150,690
Ending balance
= $159,705 - $150,690
= $9,015
