XYZ Co. was recently created with a beginning cash balance of P12,000. Expected operations for the first month follows: Cash sales P8,000 Sales on account P30,000 Cash collections P12,000 Cost of merchandise purchased P35,000 Cash paid for merchandise purchased P24,500 Cost of merchandise sold P26,600 Cash paid for display cases P9,600 Selling and administrative expenses P4,000 The display cases are being depreciated at P200 per month and it included in the selling and administrative expenses above. All other selling and administrative expenses are paid as incurred. The company maintains a cash balance of P10,000. The company can borrow from a local bank as needed in increments of P1,000. All borrowings are made at end of the month. Questions: 1. How much is the expected operating income (loss) for the 1st month? 2. How much is the expected cash borrowings at the end of month?
XYZ Co. was recently created with a beginning cash balance of P12,000. Expected operations for the first month follows: Cash sales P8,000 Sales on account P30,000 Cash collections P12,000 Cost of merchandise purchased P35,000 Cash paid for merchandise purchased P24,500 Cost of merchandise sold P26,600 Cash paid for display cases P9,600 Selling and administrative expenses P4,000 The display cases are being depreciated at P200 per month and it included in the selling and administrative expenses above. All other selling and administrative expenses are paid as incurred. The company maintains a cash balance of P10,000. The company can borrow from a local bank as needed in increments of P1,000. All borrowings are made at end of the month. Questions: 1. How much is the expected operating income (loss) for the 1st month? 2. How much is the expected cash borrowings at the end of month?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
XYZ Co. was recently created with a beginning cash balance of P12,000. Expected operations for the first month follows:
| Cash sales | P8,000 |
| Sales on account | P30,000 |
| Cash collections | P12,000 |
| Cost of merchandise purchased | P35,000 |
| Cash paid for merchandise purchased | P24,500 |
| Cost of merchandise sold | P26,600 |
| Cash paid for display cases | P9,600 |
| Selling and administrative expenses | P4,000 |
The display cases are being depreciated at P200 per month and it included in the selling and administrative expenses above. All other selling and administrative expenses are paid as incurred.
The company maintains a cash balance of P10,000. The company can borrow from a local bank as needed in increments of P1,000. All borrowings are made at end of the month.
Questions:
1. How much is the expected operating income (loss) for the 1st month?
2. How much is the expected cash borrowings at the end of month?
Transcribed Image Text:XYZ Co. was recently created with a beginning cash balance of P12,000.
Expected operations for the first month follows:
P8,000
P30,000
P12,000
P35,000
P24,500
P26,600
P9,600
P4,000
Cash sales
Sales on account
Cash collections
Cost of merchandise purchased
Cash paid for merchandise purchased
Cost of merchandise sold
Cash paid for display cases
Selling and administrative expenses
The display cases are being depreciated at P200 per month and is
included in the selling and administrative expenses above. All other
selling and administrative expenses are paid as incurred.
The company maintains a cash balance of PI0,000. The company can
borrow from a local bank as needed, in increments of P1,000. All
borrowings are made at end of the month
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