Question
Denton Company is a retail store that specializes in outdoor sporting goods. They have budgeted activity for January using the following data: January cash sales
Denton Company is a retail store that specializes in outdoor sporting goods. They have budgeted activity for January using the following data:
January cash sales | $50,000 |
January credit sales | 380,000 |
December cash sales | 75,000 |
December credit sales | 420,000 |
Selling and administrative costs (paid in month of purchase) | 50,000 |
Depreciation expense | 25,000 |
Merchandise Inventory, January 1 | 200,000 |
Merchandise Inventory, January 31 | 210,000 |
Cost of goods sold | 172,000 |
Beginning cash balance | 25,000 |
Equipment purchase made in January paid in cash | 200,000 |
Minimum cash balance required | 25,000 |
All merchandise purchases are paid in cash. |
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Credit sales are collected 60% in the month of sale, 35% in the following month, and 5% is deemed uncollectible. |
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Denton has a $50,000 line of credit that can be advanced in $1,000 increments. |
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Required:
1) Prepare a cash receipts schedule for the month of January.
2) Prepare a cash disbursements schedule for the month of January. (HINT: Calculate merchandise purchases: Beginning inventory + purchases cost of goods sold = ending inventory)
3) Prepare a cash budget for January in good form.
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