Collections from customers are normally 67 percent in the month of sale, 16 perc

Question

     Collections from customers are normally 67 percent in the month of sale, 16 percent in the month following the sale, and 16 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 4 percent discount allowed on purchases paid for by the tenth of the following month. Purchases for November are budgeted at $68,000, and sales for November are forecasted at $74,000. Cash disbursements for expenses are expected to be $14,000 for the month of November. The company’s cash balance on November 1 was $29,000.

Prepare the schedule for expected cash collections during November.

     

Prepare the schedule for expected cash disbursements during November.

     

     

The following information is from White Mountain Furniture Showroom’s financial records.

Explanation / Answer

1. Prepare the schedule for expected cash collections during November.

2) Prepare the schedule for expected cash disbursements during November.

3) Prepare the schedule for expected cash balance on November 30.

1. Prepare the schedule for expected cash collections during November.

Expected cash collection September sales (75000*16%) 12000 October sales (75000*16%) 12000 November sales (74000*67%) 49580 Total cash collection 73580

2) Prepare the schedule for expected cash disbursements during November.

Expected cash disbursement October purchase (50000*96%) 48000 Total expected cash disbursement 48000

3) Prepare the schedule for expected cash balance on November 30.

Beginning cash balance 29000 Total cash receipts 73580 Total cash available 102580 Payment on purchase (48000) Operating expenses paid (14000) Ending cash balance on november 30 40580

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