Continuation of P10-35B: cash budgets (Learning Objective 3)

Refer to P10-35B. Go Sports' sales are \(50 \%\) cash and \(50 \%\) credit (use sales on the last two lines of P10-35B). Credit sales are collected in the month after the sale. Inventory purchases are paid \(60 \%\) in the month of purchase and \(40 \%\) the following month. Salaries and sales commissions are paid three-fourths in the month earned and one-fourth the next month. Income tax is paid at the end of the year.

The July 31, 2009, balance sheet showed the following balances:

\section*{Requirements}
1. Prepare schedules of

(a) budgeted cash collections from customers,

(b) budgeted cash payments for purchases, and

(c) budgeted cash payments for operating expenses. Show amounts for each month and totals for August and September. Round your computations to the nearest dollar.
2. Prepare a cash budget similar to Exhibit 10-14. If no financing activity took place, what is the budgeted cash balance on September 30, 2009?

Transcribed Image Text:

Cash......... $22,000 Accounts payable. 52,000 Salaries and commissions payable. 6,750