Please explain teh answer for each part separated 3 Followin

Please explain teh answer for each part separated

3. Following are Arbor Co.\'s budgeted levels for 4th quarter Sales Purchases Expenses October 7,000 4,000 $ November December 9,000 12,000 5,000 7.000 900 700 800 * Sales are 10% cash, 90% credit, credit sales are collected 40% in month of sale 60% in month following sale Purchases are all credit, paid 20% month of purchase, 80% month following purchase *Expenses are paid in cash each month A. What are the company\'s expected cash collections during November? B. What are the company\'s expected cash disbursements during November? C. What is the company\'s expected November 30th balance in Accounts Receivable? D. What is the company\'s expecte Dember 31st balance in Accounts Payable?

Solution

ANS:

Cash sale in November = 10% of total sale

=9000*10%

=900

Credit sale = 9000-900 =8100

40% of credit sales are collected in the month i.e., 8100*40% =3240

Total cash collection during the month=3240+900 =4140

Total purchase (all credit) =5000

20% of total purchase is paid in the month i.e. 5000*20% =1000

Expense incurred=700

Total cash disbursement=1700

Total receivable=8100, but 3240 collected in the month (8100*40%)

Accounts receivable= 8100-3240 =4860

Total purchase = 7000

20%of whichisexpected tobe receivedin themonth=1400

A/cs payable=7000-1400 =5600