Romona Company expects its November sales to be 20% higher than its October sales of $165,000.All sales are on credit and are collected as follows: 35% in the month of the sale and 60% in the following month.Purchases were $110,000 in October and are expected to be $140,000 in November.Purchases are paid 40% in the month of purchase and 60% in the following month.The cash balance on November 1 is $13,500.The cash balance on November 30 will be

Question

Quizplus · Accepted Answer

B)
Oct.Sales $165,000 × 60% = 99,000
Nov.Sales 165,000 × 1.2% = 198,000 × 35% = 69,300
Total Cash Receipts 168,300
Oct.Purchases $110,000 × 60% = 66,000
Nov.Purchases 140,000 × 40% = 56,000
Total Cash Disbursements $122,000
Beginning Cash $13,500
Cash Receipts + 168,300
Cash Disbursements - 122,000
Ending Cash $59,800

Romona Company Expects Its November Sales to Be 20% Higher