Cash Budgeting On Dec. 1, 19_1, the XYZ Wholesale Co. is attempting to project cash receipts and

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Cash Budgeting On Dec. 1, 19_1, the XYZ Wholesale Co. is attempting to project cash receipts and disbursements through Jan. 31, 19-2. On this latter date, a note will be payable in the amount of $10,000. This amount was borrowed in September to carry the company through the seasonal peak in November and December.

The trial balance on Dec. | shows in part:

Cash $ 1,000 Accounts receivable 28,000 Allowance for bad debts $1,580 Inventory 8,750 Accounts payable 9,200 Sales terms call for a 2 percent discount if paid within the first ten days of the month after purchase, with the balance due by the end of the month after purchase. Experience has shown that 70 percent of the billings will be collected within the discount period, 20 percent by the end of the month after purchase, and 8 percent in the following month, and that 2 percent will be uncollectible.

The unit sales price of the company’s one product is $10. Actual and pro- jected sales are:

October actual $ 18,000 November actual 25,000 December estimated 30,000 January estimated 15,000 February estimated 12,000 Total estimated for year ending June 30 150,000 All purchases are payable within fifteen days. Thus, approximately 50 percent of the purchases in a month are due and payable in the next month. The unit purchase cost is $7. Target ending inventories are 500 units plus 25 percent of the next month’s unit sales.

Total budgeted selling and administrative expenses for the year are $40,000.
Of this amount, $15,000 is considered fixed (includes depreciation of $3,000).
The remainder varies with sales. Both fixed and variable selling and administrative expenses are paid as incurred.
required Prepare a columnar statement of budgeted cash receipts and disbursements for December and January.

 L01

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