42. The following information is from White Mountain Furniture Showrooms financi
ID: 2392890 • Letter: 4
Question
42. The following information is from White Mountain Furniture Showrooms financial records Month Sales Purchases July $77,000 S51,000 August 66,000 56,000 September 71,000 44,000 October 87 000 62,000 Collections from customers are normally 65 percent in the month of sale, 19 percent in the month following the sale, and 14 percent in the second month follo the sale. The balance is expected to be ases are on account Management takes full advantage of the 2 percent discount wing allowed on purchases paid for by the tenth of the following month Purchases for November are budgeted 564,000, and sales for November are expected to be $16,000 for the month of November The company s cash balance on N S38,000 expenses are ovember 1 was Required 1. Prepare the schedule for expected cash collections during November WHITE MOUNTAIN FURNITURE SHOWROOM Expected Cash Collections November Expected Collections Month Sales Percent Total 2. Prepare the schedule for expected cash disbursements during November WHITE MOUNTAIN FURNITURE SHOWR Expected Cash Disbursement November Cctober purchases to be paid in November Net Cash disbursements for expenses TotalExplanation / Answer
1. Schedule for expected cash collection
WHITE MOUNTAIN FURNITURE SHOWROOM
Expected Cash Collections
November
Month
Sales
Percent
Expected Collections
September
$71,000
14%
$9,940
October
$87,000
19%
$16,530
November
$70,000
65%
$45,500
Total
$71,970
2. Schedule for expected cash disbursements
White Mountain Furniture Showroom
Expected Cash Disbursements
November
October purchases to be paid in November
$62,000
Less : 2% Cash Discount
($1,240)
Net
$60,760
Cash disbursements for expenses
$16,000
Total
$76,760
3. Schedule for expected cash balance on November 30.
White Mountain Furniture Showroom
Expected Cash Balance
November 30
Balance, November 1
$38,000
Add : Expected Collections
$71,970
Less : Expected Disbursements
$76,760
Expected Balance
$33,210
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WHITE MOUNTAIN FURNITURE SHOWROOM
Expected Cash Collections
November
Month
Sales
Percent
Expected Collections
September
$71,000
14%
$9,940
October
$87,000
19%
$16,530
November
$70,000
65%
$45,500
Total
$71,970
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