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	$	94,000	$	60,000	$	22,000
June		120,000		85,000		28,500
July		133,000		117,000		32,500
August		133,000		73,000		29,400

The majority of Martin’s sales (65 percent) are cash, but a few of the excursion companies purchase on credit. Of the credit sales, 30 percent are collected in the month of sale and 70 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.

2. Determine budgeted cash payments for July and August.

• Required 1

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

	July August Budgeted Cash Collections

• Required 2

Determine budgeted cash payments for July and August.

	July August Budgeted Cash Payments

Answer 1

Ans. 1	MARTIN CLOTHING COMPANY
	Schedule of Cash Receipts
	For July and August
		July	August
	Cash receipts from:
	Cash sales	$86,450	$86,450
	Collection of accounts receivable
	From June credit sales	$29,400
	From July credit sales	$13,965	$32,585
	From August credit sales		$13,965
	Total budgeted cash collections	$129,815	$133,000
	*WORKING NOTES:
		June	July	August
	Cash sales = Total sales * 65%	$120,000 * 65%	$133,000 * 65%	$133,000 * 65%
		$78,000	$86,450	$86,450
	Credit sales = Total sales * 35%	$120,000 * 35%	$133,000 * 35%	$133,000 * 35%
		$42,000	$46,550	$46,550
	*Calculations from credit sales :
		July	August
	From June credit sales	$42,000 * 70%
	From July credit sales	$46,550 * 30%	$46,550 * 70%
	From August credit sales		$46,550 * 30%
Ans. 2	MARTIN CLOTHING COMPANY
	Schedule of Cash Payments
	For July and August
		July	August
	From June credit purchase	$46,750
	From July credit puchase	$52,650	$64,350
	From August credit purchase		$32,850
	Total budgeted cash payments	$99,400	$97,200
	*Calculations from credit purchase :
		July	August
	From June credit purchase	$85,000 * 55%
	From July credit puchase	$117,000 * 45%	$117,000 * 55%
	From August credit purchase		$73,000 * 45%