Graham Potato Company has projected sales of $14,400 in September, $17,000 in October, $24,400 in November,...

Graham Potato Company has projected sales of $14,400 in September, $17,000 in October, $24,400 in November, and $20,400 in December. Of the company's sales, 25 percent are paid for by cash and 75 percent are sold on credit. Experience shows that 40 percent of accounts receivable are paid in the month after the sale, while the remaining 60 percent are paid two months after. Determine collections for November and December.

Also assume Graham’s cash payments for November and December are $20,500 and $13,000, respectively. The beginning cash balance in November is $5,000, which is the desired minimum balance.

a. Prepare a cash receipts schedule for November and December.

Graham Potato Company
Cash Receipts Schedule
	September	October	November	December
Sales
Credit sales
Cash sales
One month after sale
Two months after sale
Total cash receipts			$0	$0

b. Prepare a cash budget with borrowing needed or repayments for November and December. (Negative amounts should be indicated by a minus sign. Assume the November beginning loan balance is $0.)

Graham Potato Company
Cash Budget
	November	December
Total cash receipts
Total cash payments
Net cash flow	$0	$0
Beginning cash balance
Cumulative cash balance	$0	$0
Monthly borrowing (repayment)
Ending cash balance	$0	$0
Cumulative loan balance

Expert Solution

Solution a:

Graham Potato Company
Cash Receipts Schedule
Particulars	September	October	November	December
Sales	$14,400.00	$17,000.00	$24,400.00	$20,400.00
Credit sales	$10,800.00	$12,750.00	$18,300.00	$15,300.00
Cash sales	$3,600.00	$4,250.00	$6,100.00	$5,100.00
One month after sale		$4,320.00	$5,100.00	$7,320.00
Two months after sale			$6,480.00	$7,650.00
Total cash receipts			$17,680.00	$20,070.00

Solution b:

Graham Potato Company
Cash Budget
Particulars	November	December
Total cash receipts	$17,680.00	$20,070.00
Total cash payments	$20,500.00	$13,000.00
Net cash flow	-$2,820.00	$7,070.00
Beginning cash balance	$5,000.00	$5,000.00
Cumulative cash balance	$2,180.00	$12,070.00
Monthly borrowing (repayment)	$2,820.00	-$2,820.00
Ending cash balance	$5,000.00	$9,250.00
Cumulative loan balance	$2,820.00	$0.00

ekkarill92 answered 4 months ago

Graham Potato Company has projected sales of $13,200 in September, $16,000 in October, $23,200 in November,...

Graham Potato Company has projected sales of $13,200 in September, $16,000 in October, $23,200 in November, and $19,200 in December. Of the company's sales, 25 percent are paid for by cash and 75 percent are sold on credit. Experience shows that 40 percent of accounts receivable are paid in the month after the sale, while the remaining 60 percent are paid two months after. Determine collections for November and December. Also assume Graham’s cash payments for November and December...

Graham Potato Company has projected sales of $20,400 in September, $22,000 in October, $30,400 in November,...

Graham Potato Company has projected sales of $20,400 in September, $22,000 in October, $30,400 in November, and $26,400 in December. Of the company's sales, 30 percent are paid for by cash and 70 percent are sold on credit. Experience shows that 40 percent of accounts receivable are paid in the month after the sale, while the remaining 60 percent are paid two months after. Determine collections for November and December. Also assume Graham’s cash payments for November and December...

Seager Company budgeted the following credit sales during the current year: September, $100,000; October, $120,000; November,...

Seager Company budgeted the following credit sales during the current year: September, $100,000; October, $120,000; November, $110,000; December, $111,000. Experience has shown that cash from credit sales is received as follows: 10% in the month of sale, 60% in the first month after sale, 25% in the second month after sale, and 5% is uncollectible. How much cash should Seager Co. expect to collect in November from all current and past credit sales. (1 point). Check: Cash collected in November...

Budgeted sales in Acer Corporation over the next four months are given below: September October November...

Budgeted sales in Acer Corporation over the next four months are given below: September October November December Budgeted Sales $140,000 $150,000 $170,000 $130,000 25% of the company's sales are for cash and 75% are on account. Collections for sales on account follow a stable pattern as follows: 50% of a month's credit sales are collected in the month of sale, 30% are collected in the month following sale, and 15% are collected in the second month following sale. The remainder...

The LaPann Company has obtained the following sales forecast data: July August September October Cash sales...

The LaPann Company has obtained the following sales forecast data: July August September October Cash sales $80,000 $70,000 $50,000 $60,000 Credit sales 240,000 220,000 180,000 200,000 The regular pattern of collection of credit sales is 20% in the month of sale, 70% in the following the month of sale and the remainder in the second month following the month of sale. There are no bad debts. The budgeted accounts receivable balance on September 30 would be:

Budgeted Sales: September October November December January 280,000 300,000 320,000 360,000 200,000 Planning Assumptions: 25% of...

Budgeted Sales: September October November December January 280,000 300,000 320,000 360,000 200,000 Planning Assumptions: 25% of all Sales are cash. Accounts receivable are collected 60% in the month of sale, 30% in the next month, and with the final 10% in the third month. Cost of Goods sold is 40% of sales. Inventory is purchased in the month prior to the sale, 70% is paid in the month of acquisition and 30% is paid the next month. Operating Expenses: Salaries...

September october November December January sales (units) 8000 12000 13000 16000 15000 Direct manufacturing labours hour...

September october November December January sales (units) 8000 12000 13000 16000 15000 Direct manufacturing labours hour per unit 1.79 1.75 1.70 1.65 1.60 Direct manufacturing labour rate per unit $15.75 $16.00 $16.50 $17.50 $17.50 Ending inventory required is the next month sales , plus one half the following months sales The ending inventory in august was 15000 units Each employee is required to contributed to canada pension plan in the order of 4.9% of wages, this is matched by the...

Month May June July August September October November December January Sales 350 350 250 250 350...

Month May June July August September October November December January Sales 350 350 250 250 350 550 650 750 650 Collections month 0: 80%*95% month -1: 15% month -2: 5% Payments Purchase - 70% of next month sales Purchase payment - 50% of current month purchase Purchase payment - 50% of last month purchase Lease payment 10 10 10 10 10 10 construction 0 0 0 60 0 0 wages 30 30 40 50 70 80 other 5 5 5...

The budgeted sales for Milton Machine, Inc. are shown below: August............................$12,000 September......................$10,000 October..........................$20,000 November...................... $15,000 December.........................

The budgeted sales for Milton Machine, Inc. are shown below: August............................$12,000 September......................$10,000 October..........................$20,000 November...................... $15,000 December.........................$9,000 From past experience, the company has collected 20% of the cash in the month of the sale, 50% in the month after the sale, and 30% two months after the sale occurred. Prepare a schedule of expected cash collections from sales, by month and in total for the fourth quarter of the year.

ABC Company has the following forecasts: Month Sales Forecast( $000) October 2017 $1,000 November 1,500 December...

ABC Company has the following forecasts: Month Sales Forecast( $000) October 2017 $1,000 November 1,500 December 3,000 Notes: All sales are made on credit terms of net 30 days and are collected all in the following month; There is $700 accounts receivable at the end of September; Inventory on hand represents a safety stock level and will be maintained. Inventory is purchased in the month of sale and paid for in cash. Cost of goods sold average 80 percent of...

Question