Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

LaSalle Distributors wants a projection of cash receipts and cash payments for the month of November. On November 28, a note will be payable in

LaSalle Distributors wants a projection of cash receipts and cash payments for the month of November. On November 28, a note will be payable in the amount of $98,500, including interest. The cash balance on November 1 is $29,600. Accounts payable to merchandise creditors at the end of October were $217,000.

The companys experience indicates that 70 percent of sales will be collected during the month of sale, 20 percent in the month following the sale, and 7 percent in the second month following the sale; 3 percent will be uncollectible. The company sells various products at an average price of $11 per unit. Selected sales figures are as follows.

Units
Septemberactual 40,000
Octoberactual 60,000
Novemberestimated 80,000
Decemberestimated 50,000
Total estimated for the current year 800,000

Because purchases are payable within 15 days, approximately 50 percent of the purchases in a given month are paid in the following month. The average cost of units purchased is $7 per unit. Inventories at the end of each month are maintained at a level of 2,000 units plus 10 percent of the number of units that will be sold in the following month. The inventory on October 1 amounted to 8,000 units.

Budgeted operating expenses for November are $220,000. Of this amount, $90,000 is considered fixed (including depreciation of $35,000). All operating expenses, other than depreciation, are paid in the month in which they are incurred.

The company expects to sell fully depreciated equipment in November for $8,400 cash.

Required:

Prepare a cash budget for the month of November, supported by schedules of cash collections on accounts receivable and cash payments for purchases of merchandise.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting Fraud, Maneuvering And Manipulation, Past And Present

Authors: Gary Giroux

2nd Edition

1947098748, 9781947098749

More Books

Students also viewed these Accounting questions