Martin Clothing Company is a retail company that sells hiking and other outdoor gear specially made for the desert heat. It sells to individuals as well as local companies that coordinate adventure getaways in the desert for tourists. The following information is available for several months of the current year:
Month Sales Purchases Cash Expenses Paid May $ 94,000 $ 65,000 $ 21,000 June 117,000 88,000 26,000 July 139,000 110,000 36,750 August 131,000 73,000 35,000
The majority of Martin’s sales (70 percent) are cash, but a few of the excursion companies purchase on credit. Of the credit sales, 40 percent are collected in the month of sale and 60 percent are collected in the following month. All of Martin’s purchases are on account with 40 percent paid in the month of purchase and 60 percent paid the following month.
Required: 1. Determine budgeted cash collections for July and August.
2. Determine budgeted cash payments for July and August.
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