Posted: October 5th, 2016
The following data relate to the operations of Picanuy Corporation, a wholesale distributor of consumer goods:
Current assets as of December 31:
Cash $ 6,000
Accounts receivable $36,000
Buildings and equipment, net $110,885
Accounts payable $32,550
Capital stock $100,000
Retained earnings $30,135
a. The gross margin is 30% of sales. (In other words, cost of goods sold is 70% of sales.)
b. Actual and budgeted sales data are as follows:
December (actual) $60,000
c. Sales are 40% for cash and 60% on credit. Credit sales are collected in the month following sale. The accounts receivable at December 31 are the result of December credit sales.
d. Each month’s ending inventory should equal 20% of the following month’s budgeted cost of goods sold.
e. One-quarter of a month’s inventory purchases is paid for in the month of purchase; the other three-quarters is paid for in the following month. The accounts payable at December 31 are the result of December purchases of inventory.
f. Monthly expenses are as follows: commissions, $12,000; rent, $1,800; other expenses (excluding depreciation), 8% of sales. Assume that these expenses are paid monthly. Depreciation is $2,400 for the quarter and includes depreciation on new assets acquired during the quarter.
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