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 $ 93,000 $ 68,000 $ 20,000 June 122,000 85,000 25,000 July 130,000 112,000 34,500 August 130,000 79,000 35,000 The majority of Martin’s sales (70 percent) are cash, but a few of the excursion companies purchase on credit. Of the credit sales, 35 percent are collected in the month of sale and 65 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

1.

	Martin Clothing Company
	Working for Cash Collections
	Month	May	June	July	August
	Sales	$        93,000	$        122,000	$        130,000	$        130,000
A	Cash sales @ 70%	$        65,100	$          85,400	$          91,000	$          91,000
	Credit sales @ 30%	$        27,900	$          36,600	$          39,000	$          39,000
	Cash collection from cr sales
B	Current Month @ 35% of Cr Sales	$          9,765	$          12,810	$          13,650	$          13,650
C	Previous month @ 65% on cr sales		$          18,135	$          23,790	$          25,350
D= A+B+C	Total Cash collections	$        74,865	$        116,345	$        128,440	$        130,000

Martin Clothing Company
Budgeted Cash Collection for July and August
	July	August
Cash Sales	$        91,000	$          91,000
June credit sales	$23,790.00
July credit sales	$13,650.00	$25,350.00
August credit sales		$13,650.00
Total	$     128,440	$        130,000

2.

	A	B	C	D	E=A+C+D
Month	Cash Expenses	Purchases	45% of Current month	55% of Prv Month
May	$20,000	$68,000	$30,600		$50,600
June	$25,000	$85,000	$38,250	$37,400	$100,650
July	$34,500	$112,000	$50,400	$46,750	$131,650
August	$35,000	$79,000	$35,550	$61,600	$132,150

Martin Clothing Company
Budgeted Cash Payment for July and August
	July	August
Cash Expenses	$34,500	$35,000
June Purchases	$46,750
July purchases	$50,400	$61,600
August purchases		$35,550
Total	$131,650	132,150.00