Question

Timpco, a retailer, makes both cash and credit sales (i.e., sales on open account). Information regarding budgeted sales for the last quarter of the year is as follows:

	October	November	December
Cash sales	$85,000	$75,000	$85,000
Credit Sales	85,000	90,000	93,500
Total	170,000	165,000	178,500

Past experience shows that 5% of credit sales are uncollectible. Of the credit sales that are collectible, 60% are collected in the month of sale; the remaining 40% are collected in the month following the month of sale. Customers are granted a 1.5% discount for payment within 10 days of billing. Approximately 75% of collectible credit sales take advantage of the cash discount.

    Inventory purchases each month are 100% of the cost of the following month’s projected sales. (The gross profit rate for Timpco is approximately 30%.) All merchandise purchases are made on credit, with 20% paid in the month of purchase and the remainder paid in the following month. No cash discounts for early payment are in effect.

Required:

1.	Calculate the budgeted total cash receipts for November and December. (Round your intermediate calculations and final answers to the nearest whole dollar amount)

	November	December
Total Cash Receipts

2.	Calculate budgeted cash payments for November and December (budgeted total sales for January of the coming year = $175,000). (Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.)

	November	December
Budgeted cash payments

Answer 1