Question

Sales for August, September, and October are expected to be $200,000, $180,000, and $220,000, respectively, for Pasta Company. All sales are on account (terms 2/15, net 30 days) and are collected 50 percent in the month of the sale and 50 percent in the following month. One-half of all sales discounts are taken on the average. Raw materials are purchased and paid for one month before being needed. All other purchases and expenses are paid for as incurred. Activities for the quarter are expected to be:

	August	September	October
Raw Materials Used	$40,000	$44,000	$36,000
Salaries	$70,000	$68,000	$92,000
Maintenance and Repairs	$18,000	$18,000	$18,000
Depreciation	$36,000	$36,000	$36,000
Utilities and Other	$14,000	$14,000	$15,000
Dividends Paid	-	$10,000	-
Payment on Bonds	$8,000	$8,000	$8,000

Required: Using the given information, what is the net cash inflow (outflow) for September

Answer 1

D2 fc September AB cash received from september sales cash received from august sales cash paid for raw materials to be used in october cash paid for salaries cash paid for Maintenance and Repairs cash paid for Utilities and Other cash paid for Dividends cash paid on Bonds net cash inflow (outflow) for September September $ 89,100 $ 99,000 -$ 36,000 -$ 68,000 -$ 18,000 -$ 14,000 -$ 10,000 -$ 8,000 $ 34,100

for formulas and calculations, refer to the image below -

1 x fc September A B D September cash received from september sales =(180000*50%*50%*98%)+(180000*50%*50%) cash received from august sales =(200000*50%*50%*98%)+(200000*50%*50%) - cash paid for raw materials to be used in october |=-36000 cash paid for salaries -68000 cash paid for Maintenance and Repairs -18000 cash paid for Utilities and Other - 14000 cash paid for Dividends - 10000 cash paid on Bonds -8000 net cash inflow (outflow) for September =SUM(D3:010)

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