Collections from customers are normally 65 percent in the month of sale, 16 perc
ID: 2521316 • Letter: C
Question
Collections from customers are normally 65 percent in the month of sale, 16 percent in the month following the sale, and 18 percent in the second month following the sale. The balance is expected to be uncollectible. All purchases are on account. Management takes full advantage of the 3 percent discount allowed on purchases paid for by the tenth of the following month. Purchases for November are budgeted at $62,000, and sales for November are forecasted at $68,000. Cash disbursements for expenses are expected to be $15,200 for the month of November. The company’s cash balance on November 1 was $31,000.
Prepare the schedule for expected cash collections during November.
Prepare the schedule for expected cash disbursements during November
Prepare the schedule for expected cash balance on November 30.
The following information is from White Mountain Furniture Showroom’s financial records.Explanation / Answer
WHITE MOUNTAIN FURNITURE SHOWROOM Expected Cash Collections November Month Sales Percent Expected Collections September 66,000 18 % 11,880 October 81,000 16 % 12,960 November 68,000 65 % 44,200 Total 69,040 WHITE MOUNTAIN FURNITURE SHOWROOM Expected Cash Disbursements November October purchases to be paid in November 57,000 Discount 3% 1,710 Net 55,290 Cash disbursements for expenses 15,200 Total 70,490 WHITE MOUNTAIN FURNITURE SHOWROOM Expected Cash Balance November 30 Balance, November 1 31,000 Add: Expected Collections 69,040 Less: Expected cash Disbursements 70,490 Expected Balance 29,550