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 Month May June July August Sales PurchasesPaid $120,000 $ 90,000 $ 24,000 31,500 160,000 150,000 38,250 80,000 34,700 115,000 95,000 145,000 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. July August Budgeted Cash Collections 2. Determine budgeted cash payments for July and August. August Budgeted Cash Payments

Explanation / Answer

1 Cash sales 112000 =(160000*70%) Credit sales: June sales 20700 =115000*30%*60% July sales 19200 =160000*30%*40% Budgeted cash collections July 151900 Cash sales 101500 =(145000*70%) Credit sales: July sales 28800 =160000*30%*60% August sales 17400 =(145000*30%*40%) Budgeted cash collections August 147700 2 June purchases 42750 =95000*45% July purchases 82500 =150000*55% Cash expenses 38250 Budgeted cash payments July 163500 July purchases 67500 =150000*45% August purchases 44000 =80000*55% Cash expenses 34700 Budgeted cash payments August 146200

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