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Schedule of Cash Collections of Accounts Receivable OfficeMart Inc. has "cash and carry" customers and credit customers. OfficeMart estimates that 25% of monthly sales are to cash customers, while the remaining sales are to credit customers. Of the credit customers, 25% pay their accounts in the month of sale, while the remaining 75% pay their accounts in the month following the month of sale. Projected sales for the next three months are as follows: October $127,000 November 159,000 December 232,000 The Accounts Receivable balance on September 30 was $85,000. Prepare a schedule of cash collections from sales for October, November, and December. Round all calculations to the nearest whole dollar. OfficeMart Inc. Schedule of Cash Collections from Sales For the Three Months Ending December 31 October November December Receipts from cash sales: Cash sales 31,750 39,750 58,000 September sales on account: Collected in October 85,000 October sales on account: Collected in October 23,812.5 X Collected in November 89,437.50 X November sales on account: Collected in November 29,812.50 X Collected in December 130,500 December sales on account: Collected in December 43,500 Total cash receipts 140,562.50 $ 159,000 X 232,000 X Schedule of Cash Payments for a Service Company EastGate Physical Therapy Inc. is planning its cash payments for operations for the first quarter (January-March). The Accrued Expenses Payable balance on January 1 is $30,000. The budgeted expenses for the next three months are as follows: January February March Salaries $69,000 $84,000 $93.000 Utilities 5,700 6,300 7,500 Other operating expenses 53,100 57,900 63,700 Total $127,800 $148,200 $164,200 Other operating expenses include $3,800 of monthly depreciation expense and $900 of monthly insurance expense that was prepaid for the year on May 1 of the previous year. Of the remaining expenses, 65% are paid in the month which they are incurred, with the remainder paid in the following month. The Accrued Expenses Payable balance on January 1 relates to the expenses incurred in December. Prepare a schedule of cash payments for operations for January, February, and March. Enter all amounts as positive numbers. EastGate Physical Therapy Inc. Schedule of Cash Payments for Operations For the Three Months Ending March 31 January February March 192 Total cash payments The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information: September October November Sales $143,000 $173,000 $245,000 Manufacturing costs 60,000 74,000 88,000 Selling and administrative 50,000 52,000 93,000 expenses Capital expenditures 59,000 The company expects to sell about 10% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month following the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent $8,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in January, and the annual property taxes are paid in December. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month. Current assets as of September 1 include cash of $54,000, marketable securities of $77,000, and accounts receivable of $159,200 ($125,000 from July sales and $34,200 from August sales). Sales on account for July and August were $114,000 and $125,000, respectively. Current liabilities as of September 1 include $8,000 of accounts payable incurred in August for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of $21,000 will be made in October. Bridgeport's regular quarterly dividend of $8,000 is expected to be declared in October and paid in November. Management desires to maintain a minimum cash balance of $53,000. Cash Budget For the Three Months Ending November 30 September October Estimated cash receipts from: November Total cash receipts Less estimated cash payments for: $ Other purposes: Total cash payments $ $ Cash balance at end of month $ Excess or (deficiency) $ et 2. On the basis of the cash budget prepared in part (1), what recommendation should be made to the controller? The budget indicates that the minimum cash balance and/or by the September and October, the cash balance will be maintained in November. This situation can be corrected by of the marketable securities, if they are held for such purposes. At the end of the minimum desired balance
