Question
In: Accounting
URGENT____ The Dennison Company has planned the following sales for the next three months: January February...
URGENT____
The Dennison Company has planned the following sales for the next three months:
| January | February | March | |
|---|---|---|---|
| Budgeted Sales | $40,000 | $50,000 | $70,000 |
Sales are made 20% for cash and 80% on account. From experience,
the company has learned that a month's sales on account are
collected according to the following pattern:
| Month of sale | 60% |
|---|---|
| First month following sale | 30% |
| Second month following sale | 8% |
| Uncollectible | 2% |
The company requires a minimum cash balance of $5,000 to start a
month. The beginning cash balance in March is budgeted to be
$6,000.
Required
a) Calculate the budgeted cash receipts for March.
b) The following additional information has been provided for
March:
| Inventory purchases (all paid in March) | $28,000 |
|---|---|
| Operating Expenses (all paid in March) | 40,000 |
| Depreciation expense for March | 5,000 |
| Dividends paid in March | 4,000 |
Prepare a cash budget for the month of March, using this
information and the budgeted cash receipts you calculated in part
a) above. The company can borrow in any dollar amount and will not
pay interest until April.
Solutions
ekkarill92 answered 2 years agoRelated Solutions
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