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Unit selling price is at P120. In 2019, actual sales are 3,600 and 6,600 units, still at P120 USP. Assume
that 30% of sales are paid in cash and of the on account sales
40% are collected in the same quarter as the sale;
35% are collected one quarter after the sale; and
25% are collected two quarters after the sale.
Also, cost ratio is at 60%. Of the inventories purchased for resale, 70% are on credit and are paid based
on the following terms:
50% on the same quarter as the purchase;
30% one quarter after the purchase;
20% two quarters after the purchase.
Of the expenses above, 25% of the salaries, utilities and miscellaneous are left unpaid at the end of the
year. Also, expenses for quarter 4 in 2019 are as follows:
Salaries P50,000
Utilities 15,000
Depreciation 25,000
Miscellaneous 3,000
20% of the salaries, utilities and miscellaneous are left unpaid at the end of the year and are paid on the
first quarter of 2020.
Hot Company will also have its teambuilding at the end of 2020 where the company is expected to
spend P80,000.