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: Month Sales Purchases Cash Expenses Paid May $ 120,000 $ 90,000 $ 24,000 June 115,000 95,000 31,500 July 160,000 150,000 38,250 August 145,000 80,000 34,700 The majority of Martin’s sales (70 percent) are cash, but a few of the excursion companies purchase on credit. Of the credit sales, 40 percent are collected in the month of sale and 60 percent are collected in the following month. All of Martin’s purchases are on account with 55 percent paid in the month of purchase and 45 percent paid the following month. Required: 1. Determine budgeted cash collections for July and August. 2. Determine budgeted cash payments for July and August.

Explanation / Answer

Budgeted Cash collections for July and August July August Cash Sales $112,000 $101,500 June Credit Sales Collection $20,700 July Credit Sales Collection $19,200 $28,800 August Credit Sales Collection $17,400 Cash Collections $151,900 $147,700 Budgeted Cash Payment for July and August July August June Purchases payment $42,750 July Purchases payment $82,500 $67,500 August Purchases Payment $44,000 Cash Expenses $38,250 $34,700 Cash Payments $163,500 $146,200

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