A Company's credit sales policy is to have:50% of the sales amount in cash30% collected after one month20% after two months.The purchasing policy is to pay 60% in cash and the rest is to be paid after one month.Required:Calculate the net accounting profit for December.Calculate the net cash flow for December.Comment on the difference between the two previous answers.ItemOctoberNovemberDecemberSales400,000350,000450,000Purchases350,000340,000420,000

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Answered: A Company's credit sales policy is to…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter7: Budgeting

Section: Chapter Questions

Problem 11EB: Gear Up Co. pays 65% of its purchases in the month of purchase, 30% in the month after the purchase,...

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A Company's credit sales policy is to have:

50% of the sales amount in cash
30% collected after one month
20% after two months.
The purchasing policy is to pay 60% in cash and the rest is to be paid after one month.

Required:

Calculate the net accounting profit for December.
Calculate the net cash flow for December.
Comment on the difference between the two previous answers.

Item	October	November	December
Sales	400,000	350,000	450,000
Purchases	350,000	340,000	420,000

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