The company predicts that 5 % of its credit sales will never be collected, 35 %
ID: 2690210 • Letter: T
Question
The company predicts that 5 % of its credit sales will never be collected, 35 % of its sales will be collected in the month of the sale, and the remaining 60 % will be collected in the following month. Credit purchases will be paid in the month following the purchases. <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /?>
April
May
June
Credit Sales
$390,000
$364,000
$438,000
Credit Purchases
147,800
176,300
208,500
Cash Disbursements
Wages, Taxes, & Expenses
53,800
51,000
78,300
Interest
13,100
13,100
13,100
Equipment Purchases
87,000
147,000
0
In March 2009, credit sales were $245,000, and credit purchases were $168,000. Using this information, complete the following cash budget:
April
May
June
Beginning cash balance
$140,000
Cash Receipts
Cash collections from credit sales
Total cash available
Cash disbursements
Purchases
Wages, taxes, and expenses
Interest
Equipment purchases
Total cash disbursements
Ending cash balance
April
May
June
Credit Sales
$390,000
$364,000
$438,000
Credit Purchases
147,800
176,300
208,500
Cash Disbursements
Wages, Taxes, & Expenses
53,800
51,000
78,300
Interest
13,100
13,100
13,100
Equipment Purchases
87,000
147,000
0
Explanation / Answer
April May June Beginning cash balance $300,000 Cash receipts Cash collections from credit sales 698,400 Total cash available 998,400 Cash disbursements Purchases 438,000 Wages, taxes, and expenses 67,800 Interest 28,800 Equipment purchases 154,000 Total cash disbursements 688,600