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Exercise 10-31 Cash Receipts and Payments [LO 10-4] Information pertaining to Noskey Corporation’s sales revenue follows:...

Exercise 10-31 Cash Receipts and Payments [LO 10-4] Information pertaining to Noskey Corporation’s sales revenue follows: November 2018 (Actual) December 2018 (Budgeted) January 2019 (Budgeted) Cash sales $ 115,000 $ 121,000 $ 74,000 Credit sales 282,000 409,000 208,000 Total sales $ 397,000 $ 530,000 $ 282,000 Management estimates 5% of credit sales to be uncollectible. Of collectible credit sales, 60% is collected in the month of sale and the remainder in the month following the month of sale. Purchases of inventory each month include 70% of the next month’s projected total sales (stated at cost) plus 30% of projected sales for the current month (stated at cost). All inventory purchases are on account; 25% is paid in the month of purchase, and the remainder is paid in the month following the month of purchase. Purchase costs are approximately 60% of the selling price. Required: Determine for Noskey: 1. Budgeted cash collections in December 2018 from November 2018 credit sales. 2. Budgeted total cash receipts in January 2019. 3. Budgeted total cash payments in December 2018 for inventory purchases. Next Visit question mapQuestion 1 of 3 Total 1 of 3 Prev

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Expert Solution

1. Budgeted cash collections in December 2018 from November 2018 credit sales: $107160

December
November credit sales 282000
Less: Uncollectible (5% x $282000) 14100
Collectible credit sales 267900
Collected in December $ (40% x $267900) 107160

2. Budgeted total cash receipts in January 2019: $347980

January
Cash sales 74000
Credit sales for:
December ($409000 x 95% x 40%) 155420
January ($208000 x 95% x 60%) 118560
Total cash receipts $ 347980

3. Budgeted total cash payments in December 2018 for inventory purchases: $274005

November December January
Sales 397000 530000 282000
Purchase cost @ 60% 238200 318000 169200
Inventory purchases:
70% of next month's cost of sales 222600 118440
30% of current month's cost of sales 71460 95400
Total purchases $ 294060 213840
Payment for:
November purchases ($294060 x 75%) 220545
December purchases ($213840 x 25%) 53460
Total cash payments for inventory purchases $ 274005

ekkarill92 answered 2 years ago
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