Question

Month	Sales		Purchases		Cash Expenses Paid
May	$	94,000	$	61,000	$	18,000
June		116,000		90,000		26,000
July		135,000		114,000		37,750
August		134,000		70,000		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, 35 percent are collected in the month of sale and 65 percent are collected in the following month. All of Martin’s purchases are on account with 50 percent paid in the month of purchase and 50 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