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 Cash Expenses Sales Purchases Paid Month May June Juty August 120,000 140,000 127,000 S 95,000 S 64,000 22,000 86,000 117,000 75,000 27,500 35,750 33,600 The majority of Martin's sales (70 percent) are cash, but a few of the excursion companies purchase on credit. Of the credit sales, 45 percent are collected in the month of sale and 55 percent are collected in the following month. All of Martin's purchases are on account with 50 percent paid in the month of purchase and 50 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.) July August Budgeted Cash Collections 2. Determine budgeted cash payments for July and August. July August Budgeted Cash Payments

Explanation / Answer

1.

Budgeted cash collections = Cash sales + Credit sales

= 70% of sales in the current month + 45% of credit sales in the current month + 55% of credit sales in the previous month

2.

Budgeted cash payments = 50% of current month purchases + 50% of previous month purchases + Cash expenses paid

Cash sales Credit sales May 66,500 (95,000*70%) 28,500 (95,000*30%) June 84,000 (120,000*70%) 36,000 (120,000*30%) July 98,000 (140,000*70%) 42,000 (140,000*30%) August 88,900 (127,000*70%) 38,100 (127,000*30%)

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