Information pertaining to Yekstop Corp\'s sales revenue budget is presented belo

Question

Information pertaining to Yekstop Corp's sales revenue budget is presented below. Management estimates that four percent of credit sales would be uncollectable. Of the collectible credit sales, sixty-five percent would be collected in the month of sale and the remainder in the month following the sale. The firm desires to begin each month with seventy-live percent of the month's projected total sales units on hand. All purchases of inventory were to he on account; thirty percent would be paid in the month of purchase, and the remainder would be paid in the month following the purchase. The purchase costs are sixty percent of the selling prices. Required: Calculate the total budgeted cash collections in December, the Beginning Inventory in November, the Eliding Inventory in November, and portion of December sales that will he collected in January. Enter the answers in the table below Total Budgeted Cash Collections in December Budgeted Beginning Inventory in November Budgeted Ending Inventory in November December sales collected in January

Explanation / Answer

1) Total Budgeted cash collection in December = Cash Sale + Credit Sale of December *(1-4%) * 65% + + Credit Sale of November *(1-4%) * 35%

Total Budgeted cash collection in December = 125000 + 450000 *(1-4%) * 65% + 288000 *(1-4%) * 35%

Total Budgeted cash collection in December = $ 502,568

2) Budgeted Beginning Inventory in November = Total Sale in November * Purchase Cost Percenatge * 75%

Budgeted Beginning Inventory in November = 384000*60%*75%

Budgeted Beginning Inventory in November = $ 172,800

3) Budgeted Ending Inventory in November = Total Sale in December * Purchase Cost Percenatge * 75%

Budgeted Ending Inventory in November = 575000*60%*75%

Budgeted Ending Inventory in November = $ 258,750

4) December Sale Collected in January = Credit Sale of December *(1-4%) * 35%

December Sale Collected in January = 450000 *(1-4%) * 35%

December Sale Collected in January = $ 151,200

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