[The following information applies to the questions displayed below.]
The Gingham Company's budgeted income statement reflects the following amounts:
|
Sales |
Purchases |
Expenses |
| January |
$ 126,000 |
$ 84,000 |
$ 24,600 |
| February |
116,000 |
72,000 |
24,800 |
| March |
131,000 |
87,250 |
27,600 |
| April |
136,000 |
90,500 |
29,200 |
Sales are collected 50% in the month of sale, 30% in the month following sale, and 19% in the second month following sale. 1 percent of sales is uncollectible and expensed at the end of the year.
Gingham pays for all purchases in the month following purchase and takes advantage of a 3% discount. The following balances are as of January 1:
| Cash |
$ 94,000 |
| Accounts receivable * |
64,000 |
| Accounts payable |
78,000 |
*Of this balance, $38,400 will be collected in January and the remaining amount will be collected in February. The monthly expense figures include $5,600 of depreciation. The expenses are paid in the month incurred.
1.Gingham's expected cash balance at the end of January is:
|
$91,800. |
|
$95,140. |
|
$97,400. |
|
$100,740. |
|
$119,740. |
2.Gingham's budgeted cash receipts in February are:
|
$95,800. |
|
$99,800. |
|
$120,490. |
|
$121,040. |
|
$121,400. |