Martin Clothing Company is a retail company that sells hiking and other outdoor

Question

Martin Clothing Company is a retail company that sells hiking and other outdoor gear specially made for the desert heat. It sells to individuals as well as local companies that coordinate adventure getaways in the desert for tourists. The following information is available for several months of the current year:

The majority of Martin’s sales (60 percent) are cash, but a few of the excursion companies purchase on credit. Of the credit sales, 25 percent are collected in the month of sale and 75 percent are collected in the following month. All of Martin’s purchases are on account with 45 percent paid in the month of purchase and 55 percent paid the following month.

Required:
1. Determine budgeted cash collections for July and August. (Round your intermediate calculations and final answers to nearest whole dollar.)

  

2. Determine budgeted cash payments for July and August.

Month Sales Purchases Cash Expenses Paid May $ 96,000 $ 69,000 $ 22,000 June 124,000 91,000 28,500 July 137,000 119,000 37,500 August 130,000 72,000 29,400

Explanation / Answer

1. Budgeted cash collections:

2. Budgeted cash payments:

July August Cash sales $137,000 x 60% = $82,200 $130,000 x 60% = $78,000 June Sales $124,000 x 40% x 75% = $37,200 July Sales $137,000 x 40% x 25% = $13,700 $137,000 x 40% x 75% = $41,100 August Sales $130,000 x 40% x 25% = $13,000 Budgeted cash collections $133,100 $132,100

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