Question

he following is known for Tourist Trinkets, Inc:

1. • One half of all sales are on credit.
   • Of the credit sales, 75% are collected in the same month and 25% in the next month
   • The total sales for June were $125,000 and expected sales are $160,000 in July and $130,000 in August
   • The desired ending inventory is 15% of next month's sales in units at the end of each month
   • The gross margin percentage is 40%
   • The payments to suppliers are: 70% in same month and 30% in the following month
   • Total monthly fixed selling and administrative costs are $25,000; of this amount, depreciation expense is $10,000
   • All cash expenses are paid in the month incurred.
   • Variable selling and administrative costs are $2 per unit and are paid in month incurred
   • The unit sales price is $16 per unit
   • TT plans to buy a small parcel of land at the end of July for $15,000 with cash.
   • The cash balance of July 1 was $70,000.

c. What is budgeted income before taxes for July? $____________ Show supporting work. Check figure $19,000.

d. What are budgeted total cash collections for July? $________________ Show supporting work. Check figure $155,625.

e. What are budgeted payments to suppliers in July? $ ___________   Show supporting work. Check figure $88,755.

f. What is budgeted cash balance as of July 31? $__________ Show supporting work. Check figure $86,870.

g. What is the budgeted balance of Accounts Receivable on July 31? $___________   Show supporting work. Check figure $20,000

h. What is the budgeted balance of Accounts Payable on July 31? $_______________. Show supporting work. Check figure $27,990.

Answer 1