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Question 7 : MNO 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: a) Calculate the net accounting profit for December. b) Calculate the net cash flow for December. c) 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

Question 7 : MNO 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: a) Calculate the net accounting profit for December. b) Calculate the net cash flow for December. c) 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

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter8: Budgeting
Section: Chapter Questions
Problem 18E
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Question 7: MNO 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: a) Calculate the net accounting profit for December. b) Calculate the net cash flow for December. c) 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
Transcribed Image Text:Question 7: MNO 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: a) Calculate the net accounting profit for December. b) Calculate the net cash flow for December. c) 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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