Question

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	$	68,000	$	23,000
June		117,000		85,000		29,000
July		137,000		114,000		38,000
August		125,000		78,000		30,800

The majority of Martin’s sales (65 percent) are cash, but a few of the excursion companies purchase on credit. Of the credit sales, 30 percent are collected in the month of sale and 70 percent are collected in the following month. All of Martin’s purchases are on account with 60 percent paid in the month of purchase and 40 percent paid the following month.

Required:

1. Determine budgeted cash collections for July and August.

2. Determine budgeted cash payments for July and August.

Answer 1

If you have any doubts please comment on the answer.