Lara Company’s budget includes the following credit sales for the current year: September,
$25,000; October, $36,000; November, $30,000; December, $32,000. Experience has
shown that payment for the credit sales is received as follows: 15% in the month of sale,
60% in the first month after sale, 20% in the second month after sale, and 5% is
uncollectible. How much cash can Lara Company expect to collect in November as a result
of current and past credit sales?
a. $19,700.
b. $28,500.
c. $30,000.
d. $31,100.
e. $33,900.
If a company applies overhead to production with a predetermined rate, a credit balance in
the Factory Overhead account at the end of the period means that:
a. The bookkeeper has made an error because the debits don’t equal the credits.
b. The balance will be carried forward to the next period as an overhead cost.
c. Actual overhead was less than the overhead amount charged to production.
d. The overhead was underapplied for the period.
e. Actual overhead was greater than the overhead amount charged to production.