Qualification > Commerce

Urgent Accounting question on cash budgets! PLEASE HELP!

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Dasith:
cash paid 4 purchases, hmm wait i think you got confused with da words in marking scheme , dont be too dependent on it!

Dasith:
I think its cash recieved from debtors you want:
(since one months credit is allowed we assume we receive cash from credit customers exactly after 1 month)

so cash from debtors for October is 40000(previous month sales) x 3/4 = 30000
                               November is 48000 x 3/4=36000
                               ......(& continues till months are over)

Qudsiyah:

--- Quote from: Dasith on April 27, 2011, 04:18:10 pm ---I think its cash recieved from debtors you want:
(since one months credit is allowed we assume we receive cash from credit customers exactly after 1 month)

so cash from debtors for October is 40000(previous month sales) x 3/4 = 30000
                               November is 48000 x 3/4=36000
                               ......(& continues till months are over)


--- End quote ---



how do you get 3/4 ?

Dasith:
25% is cash sales , So the other 75% is only credit sales i.e 3/4 got it?

Dasith:
Now calculating cash paid 2 creditors :)

gross profit margin is 1/3 or 33.33%

Here we assume Cost of sales=Purchases (as opening stock is not given althaugh closing is given)
"Goods are purchased one month before sale and paid for two months after purchase"
it means september one is purchased in August & paid in octomber(2 months after purchase)

40000 is sales in september which contains 33.33% or 1/3 gross profit margin
cost of sales = 2/3 or 66.66% of 40000 which is equal to 26.6*(you can round it up to 27)

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