Question

nformation pertaining to Noskey Corporation’s sales revenue follows:

	November 2018 (Actual)				December 2018 (Budgeted)				January 2019 (Budgeted)
Cash sales	$	180,000			$	160,000			$	100,000
Credit sales		360,000				500,000				260,000
Total sales	$	540,000			$	660,000			$	360,000

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

*the question gives the following layout:

January 2019

Cash sales in January

Collections from credit sales in January:

Total collectible from credit sales

Percentage to be collected in January

Collections from credit sales in December:

Total collectible from credit sales

Percentage to be collected in January

Budgeted total cash receipts in January

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

*layout given in problem:

Total inventory purchases in November:

For November Sales:

For December Sales:

Percentage of November purchases to be paid in December:

Payment in December for purchases in November:

Budgeted purchases in December:

For December sales:

For January sales:

Percentage of December purchases to be paid in December

Payment in December for purchases in December

Budgeted cash payment in December for inventory purchases

Answer 1