Martin Clothing Company is a retail company that sells hiking and other outdoor
ID: 2558601 • Letter: M
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 Month May June July August $ 95,000$ 62,000 124,000 134,000 130,000 89,000 113,000 76,000 Paid 21,000 24,500 36,000 33,600 The majority of Martin's sales (65 percent) are cash, but a few of the excursion companies purchase on credit. Of the credit sales, 30 percent are collected in the month of sale and 70 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. 1. Determine budgeted cash collections for July and August. (Round your intermediate calculations and final answers to nearest whole dollar.) July Budgeted Cash Collections 2. Determine budgeted cash payments for July and August. July August Budgeted Cash PaymentsExplanation / Answer
Solution:
Part 1 --- Cash Collection
Budgeted Cash Collections
July
August
Total Sales
$134,000
$130,000
Cash Sales (65% of Total Sales) (A)
$87,100
$84,500
Credit Sales (35% of Total Sales)
$46,900
$45,500
Schedule of Cash Collection from Credit Sales
June Sales
$30,380
(124,000*35%*70%)
July Sales
$14,070
(46900*30%)
$32,830
(46900*70%)
August Sales
$13,650
(45500*30%)
Total Cash Collection from Credit Sales (B)
$44,450
$46,480
Total Budgeted Cash Collections (A+B)
$131,550
$130,980
$0
Part 2 – Cash Payments
Budgeted Cash Payments
July
August
June Purchases
$48,950
(89000*55%)
July Purchases
$50,850
(113000*45%)
$62,150
(113000*55%)
August Purchases
$34,200
(76000*45%)
Cash Payment for Purchases
$99,800
$96,350
Add: Cash Expenses Paid
$36,000
$33,600
Total Cash Payment
$135,800
$129,950
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Budgeted Cash Collections
July
August
Total Sales
$134,000
$130,000
Cash Sales (65% of Total Sales) (A)
$87,100
$84,500
Credit Sales (35% of Total Sales)
$46,900
$45,500
Schedule of Cash Collection from Credit Sales
June Sales
$30,380
(124,000*35%*70%)
July Sales
$14,070
(46900*30%)
$32,830
(46900*70%)
August Sales
$13,650
(45500*30%)
Total Cash Collection from Credit Sales (B)
$44,450
$46,480
Total Budgeted Cash Collections (A+B)
$131,550
$130,980
$0
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