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The ABC Company\'s Budgeted sales and directed materials purchases are as follow

ID: 2459577 • Letter: T

Question

The ABC Company's Budgeted sales and directed materials purchases are as follows.

The company sales are 40% cash and 60% credit. Credit sales are collected 10% in the month of sale, 50% in the month following sale, and 36% in the second month following sale; 4% are uncollectible. The company purchases are 50% cash and 50% on account. Purchases on account are paid 40% in the month of purchase, and 60% in the month following purchase.

(a) Prepare a schedule of expexted collections from customers for june.

(b) Prepare a schedule of expected payments for direct materials for june.

Budgeted Sales Budgeted Direct Material Purchases April $300,000 $60,000 May 330,000 70,000 June 350,000 80,000

Explanation / Answer

schedule of expexted collections from customers for june. Particulars April May June Budgeted Sales         300,000.00         330,000.00         350,000.00 Cash Sales @40%    (a)         120,000.00         132,000.00         140,000.00 Credit Sales = Sale- cash sales         180,000.00         198,000.00         210,000.00 Collection of credit sale in same month @10% b           18,000.00           19,800.00           21,000.00 Collection of credit sale in next month @50% c           90,000.00           99,000.00 Collection of credit sale in second month @36% d           64,800.00 Total Collections a+b+c+d         138,000.00         241,800.00         324,800.00 schedule of expected payments for direct materials for june Particulars April May June Budgeted Direct Material Purchases           60,000.00           70,000.00           80,000.00 Cash Purchases   @ 50% (a)           30,000.00           35,000.00           40,000.00 Credit Purchases @50%           30,000.00           35,000.00           40,000.00 Payment in same month @40% (b)           12,000.00           14,000.00           16,000.00 Payment in next month @60% (c)           18,000.00           21,000.00 Total Payments a+b+c           42,000.00           67,000.00           77,000.00