Hartford Company, needs help developing cash and other budget information for Au
ID: 2479558 • Letter: H
Question
Hartford Company, needs help developing cash and other budget information for August. At July 31, the company had cash of $10,000, accounts receivable of $864,000, inventories of $666,875, and accounts payable of $207,674. The budget is to be based on the following assumptions.
•
Each month’s sales are billed on the last day of the month.
•
Customers are allowed a 3 percent discount if payment is made within 10 days after the billing date. Receivables are recorded in the accounts at their gross amounts (not net of discounts).
•
The billings are collected as follows: 55 percent within the discount period, 30 percent by the end of the month, and 9 percent by the end of the following month. Six percent is uncollectible.
Purchase data are as follows.
Dollars
Units
June
$
753,600
47,100
July
780,800
48,800
August
776,000
48,500
September
729,600
45,600
October
776,000
48,500
November
788,800
49,300
Required:
(a)
Compute the Budgeted purchases in dollars for August.
(b)
Compute the Budgeted cash collections during August.
Hartford Company, needs help developing cash and other budget information for August. At July 31, the company had cash of $10,000, accounts receivable of $864,000, inventories of $666,875, and accounts payable of $207,674. The budget is to be based on the following assumptions.
Explanation / Answer
The question is incomplete. The information related to the calculation of budgeted purchased has not been provided. The data given in the question should be for sales and therefore, only Part b) can be answered
_________
The total value of cash collections for August is calculated as below:
Cash Collections (From July Sales) = 780,800*55%*(1-3%) + 780,800*30% = $650,796.80 [from July Sales]
Cash Collections (From June Sales) = 753,600*9% = $67,824
Total Cash Collections (August) = 650,796.80 + 67,824 = $718,620.80 or $718,621
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.