The following data have been extracted from the financial statements of Prentiss, Inc., a calendar-year merchandising corporation: December 31,
Balance Sheet Data 2017 2018
Trade accounts receivable-net 84,000 78,000
Inventory 150,000 140,000
Accounts payable-merchandise (credit) (95,000) (98,000)
Total sales for 2018 were $1,200,000 and for 2017 were $1,100,000.
Cash sales were 20 % of total sales each year
Cost of goods sold was $840,000 for 2018.
Variable general and administrative (G&A) expenses for 2018 were $120,000.
These expenses are the same proportion of sales every year 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 2018 that resulted from total sales 2017 and 2018.
2. The amount of cash disbursed during 2018 for purchases of merchandise.
3. The amount of cash disbursed during 2018 for variable and fixed G&A expenses

Prentiss, Inc.

Computation of:

1. The amount of cash collected during 2018 that resulted from total sales 2017 and 2018:

                                                                       2018

Beginning Trade accounts receivable       84,000

Credit Sales                                              960,000

Ending Trade accounts receivable-net    (78,000)

Cash received from customers              966,000

Cash sales (20% of Sales)                       240,000

Total cash collected                            $1,206,000

2. The amount of cash disbursed during 2018 for purchases of merchandise:

                                                                                    2018

Beginning Accounts payable-merchandise             95,000

add Purchases (Cost of goods sold)                       840,000

less Ending Accounts payable-merchandise           98,000

Cash disbursed for purchases of merchandise  $837,000

3. The amount of cash disbursed during 2018 for variable and fixed G&A expenses:

Fixed:

80% of $60,000 paid in the year = $48,000

20% of $60,000 for last year's =       12,000

Cash disbursed for Fixed G&A =                      $60,000

Variable:

80% of $120,000 paid in the year = $96,000

20% of $110,000 for last year's =      22,000  $118,000

Total G&A paid during 2018 =                         $178,000

Explanation:

a) Data and Calculations:

1. December 31,

Balance Sheet Data                                        2017              2018

Trade accounts receivable-net                    84,000           78,000

Inventory 150,000 140,000

Accounts payable-merchandise (credit)    (95,000)        (98,000)

Total sales                                              $1,100,000   $1,200,000

Cash sales were 20 % of total sales each year

Cost of goods sold was $840,000 for 2018

Cost of goods sold for 2017 = $770,000 ($840,000/1,200,000 x $1,1,00,000)

Variable general and administrative (G&A) expenses for 2018 were $120,000

Variable general and administrative (G&A) expenses for 2017 $110,000 ($120,000/$1,200,000 x $1,100,000)

Fixed general and administration (G&A) expenses for each year = $100,000

Cash paid for Fixed general and administration:

Total amount =       $100,000

less depreciation       35,000

less bad debts             5,000

Cash paid for fixed $60,000

i'ts proportional. if the inflation rate is 12% for example, the cpi will be 12% less.

hope it ,

bioteacher101

hi,

henry is an economist and wants to understand the relationship between inflation and consumer spending habits. for his research, he needs the consumer price index for 2014 and the inflation rate. based on the prices of goods given, what will he find to be the cpi and inflation rate for 2014? assume that a consumer’s basket for three consecutive years consists of the following:

you dont privide answer choices.

answer - 15% of a inflatation rate is 15% less in cpi