Question
Cash Receipts The sales budget for Andrew Inc. is forecasted as follows: Month Sales Revenue May $ 170,000 June 210,000 July 230,000 August 170,000 Create
Cash Receipts
The sales budget for Andrew Inc. is forecasted as follows:
Month
Sales Revenue
May
$ 170,000
June
210,000
July
230,000
August
170,000
Create a cash budget, the company must determine the budgeted cash collections from sales. Historically, the following trend has been established regarding cash collection of sales:
- 50 percent in the month of sale.
- 25 percent in the month following sale.
- 20 percent in the second month following sale.
- 5 percent uncollectible.
The company gives a 2 percent cash discount for payments made by customers during the month of sale. The accounts receivable balance on April 30 is $34,000, of which $10,000 represents uncollected March sales and $24,000 represents uncollected April sales.
Create a schedule of budgeted cash collections from sales for May, June, and July. Include a three-month summary of estimated cash collections.
Andrew, Inc.
Schedule of Budgeted Cash Collections
Quarterly by Months
May
June
July
Total
Total Cash receipts:
$Answer
$Answer
$Answer
$Answer
2. Purchases and Cash Budgets
On July 1, MTC Wholesalers had a cash balance of $175,000 and accounts payable of $99,000. Actual sales for May and June, and budgeted sales for July, August, September, and October are:
Month
Actual Sales
Month
Budgeted Sales
May
$150,000
July
$ 90,000
June
160,000
August
80,000
September
100,000
October
120,000
All sales are on credit with 75 percent collected during the month of sale, 20 percent collected during the next month, and 5 percent collected during the second month following the month of sale. Cost of goods sold averages 70 percent of sales revenue. Ending inventory is one-half of the next month's predicted cost of sales. The other half of the merchandise is acquired during the month of sale. All purchases are paid for in the month after purchase. Operating costs are estimated at $28,000 each month and are paid during the month incurred.
Required
Prepare purchases and cash budgets for July, August, and September.
MTC Wholesalers
Purchases Budget
For the Months of July, August, and September
July
August
September
Inventory required, current sales
$Answer
$Answer
$Answer
Desired ending inventory
Answer
Answer
Answer
Total inventory needs
Answer
Answer
Answer
Less beginning inventory
Answer
Answer
Answer
Purchases
$Answer
$Answer
$Answer
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Microsoft Excel For Accounting The First Course
Authors: L Murphy Smith, Katherine Smith
1st Edition
0130085529, 978-0130085528
