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Moorcroft Company's budgeted sales and direct materials purchases are as follows: April Budgeted Sales $ 316,000 336,000 377.000 Budgeted D.M. Purchases $ 47,000 57.000 61,000
Moorcroft Company's budgeted sales and direct materials purchases are as follows: April Budgeted Sales $ 316,000 336,000 377.000 Budgeted D.M. Purchases $ 47,000 57.000 61,000 May June Moorcroft's sales are 40% cash and 60% credit. Credit sales are collected 20% in the month of sale. 50% in the month following sale, and 26% in the second month following sale; 4% are uncollectible. Moorcroft's purchases are 50% cash and 50% on account. Purchases on account are paid 40% in the month following the purchase and 60% in the second month following the purchase. (a) (b) Moorcroft's assistant controller suggested that Moorcroft hire a part time collector to encourage customers to pay more promptly and to reduce the amount of uncollectible accounts. Sales are still 40% cash and 60% credit but the assistant controller predicted that this would cause credit sales to be collected 30% in the month of the sale, 50% in the month following sale, and 18% in the second month following sale: 2% are uncollectible. Prepare a schedule of expected collections from customers for June. How did these changes impact cash collections? Moorcroft Company Schedule of Expected Collections from Customers April May Sales June 316000 $ 336000 100800 377000 $ $ $
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