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 |
$ |
120,000 |
$ |
90,000 |
$ |
24,000 |
June |
115,000 |
95,000 |
31,000 |
|||
July |
160,000 |
150,000 |
38,250 |
|||
August |
145,000 |
80,000 |
34,700 |
|||
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 55 percent paid in the month of purchase and 45
percent paid the following month.
Required:
1. Determine budgeted cash collections for July
and August.
|
2. Determine budgeted cash payments for July and
August.
|
1 | ||
July | August | |
Budgeted Cash Collections | 151900 | 147700 |
2 | ||
July | August | |
Budgeted Cash Payments | 163500 | 146200 |
Workings: | ||
July | August | |
Cash sales | 112000 | 101500 |
Credit sales: | ||
June sales | 20700 | 0 |
July sales | 19200 | 28800 |
August sales | 0 | 17400 |
Budgeted Cash Collections | 151900 | 147700 |
July | August | |
June purchases | 42750 | |
July purchases | 82500 | 67500 |
August purchases | 0 | 44000 |
Cash Expenses Paid | 38250 | 34700 |
Budgeted Cash Payments | 163500 | 146200 |
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