Bill Bob, plans to sell toy cars over the internet and by mail order. Billy Bob

Question

Bill Bob, plans to sell toy cars over the internet and by mail order. Billy Bob buys the toy cars for $24 and sells them for $32. if payment by cheque accompanies the mail orders (estimated to be 50 per cent of sales). Billy Bob gives a 10 per cent discount. If customers include a credit card number for either internet or mail order sales (20 per cent of sales). customers receive a 5 per cent discount. The remaining collections are estimated to be: One month following 12% Two months following 8% Three months following 6% Uncollectable 4% Billy Bob has forecasted the following sales volumes: June 80 units July 120 units August 160 units September 105 units Billy Bob plans to pay his supplier 60 per cent in the month of purchase and 40 per cent in the month following. A 10 per cent discount is granted on payments made in the month of purchase Billy Bob has 40 toy cars on hand (purchased in May and to be paid for in June) and plans to maintain enough end-of- month inventory to meet 50 per cent of the next months sales. Required Prepare schedules for monthly budgeted cash receipts and cash disbursements for this venture.

Explanation / Answer

Computation of Purchases Particulars June July Aug Sep Opening Stock 40 60 80 52.5 Sales 80 120 160 105 Closing Stock 60 80 52.5 0 Purchases 100 140 132.5 52.5 Computation of amount collected Particulars June July Aug Sep Payment by Cheque 1,152 1,728 2,304 1,512 Payment by Credit Card Number 486 730 973 638 One month following sale 256 384 512 Two month following sale 205 307 Three month following sale 154 Total Amount Collected 1,638 2,714 3,866 3,123 Computation of amount disbursed Particulars June July Aug Sep Payment in month of purchase 1,440 2,016 1,908 756 Payment in subsequent month 384 960 1,344 1,272 Total Amount paid 1,824 2,976 3,252 2,028

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