The following information is from Sears financial. Month Sales Purchases Jan 810
ID: 2492030 • Letter: T
Question
The following information is from Sears financial.
Month
Sales
Purchases
Jan
81000
43000
Feb
77000
46000
Mar
71000
36000
Apr
75000
55000
May
76500
59000
Jun
78000
62000
Collection from customers are normally 70% in the month of sale, 20% in the month following the sale and 9% in the secod month following the sale.
The balance is expected to be uncollectible. All purchases are on account. Managements takes full advantage of the 2$ discount allowed on purchases paid for the 10th of the following monyh. Purchases for august are budgeted at 60,000 and sales for august are forecasted at 66,000. Cash disbursements for expenses are expected to be 14,000 for the moth of august. The company cash balance on august 1 was 22,000.
Prepare the following schedules:
Expected cash collections during august.
Expected cash disburements during august.
Month
Sales
Purchases
Jan
81000
43000
Feb
77000
46000
Mar
71000
36000
Apr
75000
55000
May
76500
59000
Jun
78000
62000
Explanation / Answer
Month Sales Purchases Opening Cash Balance Cash Collection Cash Disbursement Closing Balance Jan 81000 43000 0 56700 0 56700 Feb 77000 46000 56700 70100 42998 83802 Mar 71000 36000 83802 72390 45998 110194 Apr 75000 55000 110194 73630 35998 147826 May 76500 59000 147826 74940 54998 167768 Jun 78000 62000 167768 76650 58998 185420 July Omitted Omitted 22000 Given August 66000 60000 22000 53220 14000 61220 Cash Collection during August Cash Disbursement During August 1. 70% of August Sales 46200 Cash Payment for July Purchase 0 2. 20% of July Sales 0 Less: Discount 0 3. 9% of June Sales 7020 Expense Payment 14000 Total 53220 Total 14000 Closing Balance of August Opening Balance(Given) 22000 Cash Collection 53220 Cash Disbursement -14000 Closing Balance 61220
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