Question

Martin Clothing Company is a retail company that sells hiking and other outdoor gear specially made for the desert heat. It sells to individuals as well as local companies that coordinate adventure getaways in the desert for tourists. The following information is available for several months of the current year:

Month	Sales		Purchases		Cash Expenses Paid
May	$	91,000	$	65,000	$	22,000
June		123,000		90,000		25,500
July		133,000		112,000		37,500
August		131,000		76,000		30,100

The majority of Martin’s sales (60 percent) are cash, but a few of the excursion companies purchase on credit. Of the credit sales, 45 percent are collected in the month of sale and 55 percent are collected in the following month. All of Martin’s purchases are on account with 40 percent paid in the month of purchase and 60 percent paid the following month.

Required:
1. Determine budgeted cash collections for July and August. (Round your intermediate calculations and final answers to nearest whole dollar.)

  

2. Determine budgeted cash payments for July and August.

Answer 1

Cash budget for the year july and August
Particulars	July	August
Cash balance	0	-5500
Receipts:-
cash sale	79800	78600
Receipts from Drs	51000	52840
Tatal receipt    (A)	130800	125940
Payments:-
cash purchase	44800	30400
payment to creditors	54000	67200
Expense paid	37500	30100
Tatal Payment    (B)	136300	127700
Closing cash balance	-5500	-1760

working notes
Particulars	june	July	Aug
sales
Total sales         (a)	123000	133000	131000
cash sale 60% (b)	73800	79800	78600
creditsales ©	49200	53200	52400
receipt from Drs
same month 45%	22140	23940	23580
following month 55%	50050	27060	29260
Total receipt from Drs	72190	51000	52840
Purchase
Total purchase	90000	112000	76000
Cash purchase (40%)	36000	44800	30400
credit purchase	54000	67200	45600
Expense
assume paid in same month	25500	37500	30100
Assume opening cash July is nil