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	$	65,000	$	19,000
June		121,000		91,000		27,000
July		138,000		115,000		38,000
August		127,000		72,000		29,400

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. (Round your intermediate calculations and final answers to nearest whole dollar.)



2. Determine budgeted cash payments for July and August.

Answer 1

1.budgeted cash collections for July and August.

	july	august
cash sales (65% *138,000 , 127,000)	89,700	82,550
current month credit sale cash collection (35%*35%*138,000 , 127,000)	16,905	15,558
previous month credit sale cash collection (35%*65% * june sale , july sale) (35%*65%*121,000 , 138,000)	27,528	31,395
total cash collection	134,133	129,503

2.cash payments for july and august:

	july	august
cash expenses paid	38,000	29,400
50% of current month purchases (50%* 115,000 , 29,400)	57,500	14,700
50% of previous month purchases (50%* june , july) (50% *91,000 , 115,000)	45,500	57,500
total	141,000	101,600