Question

The following information is from Barkley’s Auto Alarm Company financial records. Collections from customers are normally...

The following information is from Barkley’s Auto Alarm Company financial records. Collections from customers are normally 70 percent in the month of sale, 20 percent in the month following the sale, and 9 percent in the second month following the sale. The balance is expected to be uncollectible. All purchases are on account. Management takes full advantage of the 3 percent discount allowed on purchases paid for by the tenth of the following month. Purchases for December are budgeted at $72,000, and sales for December are forecasted at $78,000. Cash disbursements for expenses are expected to be $16,800 for the month of December. The company’s cash balance on December 1 was $28,000.

Month Sales Purchases
August $ 84,000 $ 54,000
September 78,000 60,000
October 72,000 48,000
November 90,000 66,000

Required:

Prepare the expected cash collections during December.

Prepare the expected cash disbursements during December.

Prepare the expected cash balance on December 31.

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Prepare the expected cash collections during December.
Month Expected Collections
October
November
December
Total $0

Prepare the expected cash disbursements during December.
BARKLEY’S AUTO ALARM COMPANY
Expected Cash Disbursements
December
November purchases to be paid in December
Net $0
Cash disbursements for expenses
Total $0

Prepare the expected cash balance on December 31.
BARKLEY’S AUTO ALARM COMPANY
Expected Cash Balance
December 31
Balance, December 1
Expected balance $0
Business   Accounting   
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Homework Answers

Answer #1
Month Expected Collections
October 7,560 + 15,600 + 50,400 = $ 73,560.00
November 7,020 + 14,400 + 63,000 = $ 84,420.00
December 6,480 + 18,000 + 54,600 = $ 79,080.00
Total Collections $ 237,060.00
Barkleys Auto Alarm Company
Expected Cash Disbursements
December Amount ($)
November purchases to be paid in December 66,000.00
Less : Discount 3 % 1,980.00
Net 64,020.00
Cash Disbursement for expenses 16,800.00
Total 80,820.00
Berkleys Auto Alarm Company
Expected Cash Balance
December Amount ($)
Balance As on December 1 28,000.00
Add: Collections from above table 79,080.00
Less : Cash Disbursements during the month 80,820.00
Balance As on December 31 26,260.00
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