Question

Alco Inc. deals in wooden charis and had following sales revenue: Month Sales Revenue Jan 132,000 Feb 168,000 Mar 149,000 Apr 155,000 161,000 177,000 I The company charges 20% margin on the purchase price of the goods. The balance of inventory as at January 01 was $78,000 and at June 30 was $56,500. The purchases made were paid 50% in the month of purchases, 25% in the next month, and 25% in the following month May Jun

Cash flow

Answer 1

Statement showing cash flow for each month:

Pariculars	January	February	March	April	May	June
(A) Opening Balance	0	77,000	147,500	171,916.5	196,301.25	226,889.25
(B) Sales Revenue	132,000	168,000	149,000	155,000	161,000	177,000
Purchase	110,000	140,000	124,167	129,147	134,167	147,500
Payment for purchase (C) 50%	55,000	70,000	62,083.5	64,573.5	67,083.5	73,750
(D) 25%	0	27,500	35,000	31,041.75	32,286.75	33,541.75
(E) 25%	0	0	27,500	35,000	31,041.75	32,286.75
(F) Closing Balance [(A)+(B)-(C)-(D)-(E)]	77,000	147,500	171,916.5	196,301.25	226,889.25	264310.75

Working Note 1: Calculation of purchase price

Month	Sales	Calculation	Purchase
January	132,000	132,000/120*100	110,000
February	168,000	168,000/120*100	140,000
March	149,000	149,000/120*100	124,167
April	155,000	155,000/120*100	129,167
May	161,000	161,000/120*100	134,167
June	177,000	177,000/120*100	147,500

Note: It is assumed that sales revenue is amount collected i.e. it is cash sales only.