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	$	97,000	$	65,000	$	21,000
June		123,000		91,000		25,000
July		132,000		116,000		37,500
August		125,000		77,000		30,100

The majority of Martin’s sales (70 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 45 percent paid in the month of purchase and 55 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

Answer:
Particular		June	July	August
		(Amount $)	(Amount $)	(Amount $)
Cash Sales	70%	86,100	92,400	87,500
Credit Sale	30%	36,900	39,600	37,500
Total		1,23,000	1,32,000	1,25,000
Cash purchase	45%	40,950	52,200	34,650
Credit purchase	55%	50,050	63,800	42,350
Total Purchase		91,000	1,16,000	77,000
Cash collected from cash sales			92,400	87,500
Cash collected from current month credit sales	45%		17,820	16,875
Cash collected from Previous month credit sales	55%		20,295	21,780
Budgeted Cash collection during the month			1,30,515	1,26,155
Roundoff			1,30,520	1,26,160
Cash paid for current month purchase	45%		52,200	34,650
Cash paid for Previous month purchase	55%		50,050	63,800
Cash expense paid			37,500	30,100
Budgeted cash payment			1,39,750	1,28,550