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	$	92,000	$	61,000	$	20,000
June		117,000		87,000		27,000
July		135,000		117,000		38,000
August		130,000		72,000		30,100

The majority of Martin’s sales (60 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.

• Required 1
• Required 2

Determine budgeted cash collections for July and August. (Round your intermediate calculations and final answers to nearest whole dollar.)

	July	August
Budgeted Cash Collections

Complete this question by entering your answers in the tabs below.

• Required 1
• Required 2

Determine budgeted cash payments for July and August.

	July	August
Budgeted Cash Payments

Answer 1

1)

	July	August
Cash sales	135000*60%=81000	130000*60%=78000
credit sales collections
June credit sales {117000*40% = 46800}	46800*65%= 30420
July credit sales {135000*40%=54000}	54000*35%= 18900	54000*65%= 35100
August credit sales {130000*40%=52000}		52000*35%= 18200
Total cash collections	130320	131300

#If 60% of sales are for cash then remaining 40% of sales are for credit

2)

	July	August
Payment to suppliers
June purchase	87000*50%=43500
July purchase	117000*50%=58500	58500
August purchase		72000*50%=36000
Total payment to suppliers	102000	94500
payment for cash expenses	38000	30100
Total cash payment	140000	124600