Worton distributing expects its september sales to be

This preview shows page 13 - 16 out of 30 pages.

We have textbook solutions for you!
The document you are viewing contains questions related to this textbook.
Economics: A Contemporary Introduction
The document you are viewing contains questions related to this textbook.
Chapter 26 / Exercise 3
Economics: A Contemporary Introduction
McEachern
Expert Verified
59. Worton Distributing expects its September sales to be 25% higher than its August sales of $150,000. Purchases were $100,000 in Augustand are expected to be $120,000 in September. All sales are on credit and are collected as follows: 30% in the month of the sale and 70%in the following month. Purchases are paid 25% in the month of purchase and 75% in the following month. The beginning cash balanceon September 1 is $10,000. The ending cash balance on September 30 would be:A. $56,250.B. $56,500.C. $65,250.D. $66,250.E. $76,250.
We have textbook solutions for you!
The document you are viewing contains questions related to this textbook.
Economics: A Contemporary Introduction
The document you are viewing contains questions related to this textbook.
Chapter 26 / Exercise 3
Economics: A Contemporary Introduction
McEachern
Expert Verified
1. Beginning cash balance (given) = $10,0002. Cash receipts from credit sales made in August ($150,000 x 0.70) = $105,0003. Cash receipts from credit sales made in September ([$150,000 x 1.25] x 0.30) = $56,2504. Cash disbursements from purchases made in August ($100,000 x 0.75) = $75,0005. Cash disbursements from purchases made in September ($120,000 x 0.25) = $30,0006. Ending cash balance = $10,000 + $105,000 - $75,000 - $30,000 + $56,250 = $66,2501. Beginning inventory (given) = $100,0002. Gross Profit = $300,000 * 20% = $60,0003. Cost of Goods Sold During the Quarter = $300,000 - $60,000 = $240,0004. Desired ending inventory = $40,0005. Required inventory purchases to meet desired ending inventory = $240,000 + $40,000 - $100,000 = $180,0001. Jan. budgeted cash receipts from Nov. credit sales = $12,0002. Dec. 31 accounts receivable balance from Dec. sales = ($54,000 - $12,000) = $42,0003. Total December credit sales = (42,000/0.6) = $70,0004. Portion of December credit sales budgeted to receive in January = $42,000 - $7,000 = $35,0006. Jan. cash sales = (100,000 * 20%) = $20,0007. Jan. credit sales = $100,000 - $20,000 = $80,0008. Jan. cash receipts from Jan. credit sales = ($80,000 x 40%) = $32,0009. Total budgeted January cash receipts = $12,000 + $35,000 + $20,000 + $32,000 = $99,0001. Cash sales in February ($120,000 x 0.20) = $24,0002. Collection in February of a portion of February's credit sales = ($120,000 x 0.80) x 0.40 = $38,4003. Collection in February of a portion of January's credit sales = ($100,000 x 0.80) x 0.50 = $40,0003. Total December credit sales: December 31 $54,000 A/R less November portion $12,000 = $42,000 and this is 60% of total December sales.Therefore December sales = (42,000/0.6) = $70,0004. Portion of Dec. credit sales budgeted to receive in February = ($70,000 * 10%) = $7,0005. Budgeted cash receipts for February = $24,000 + $38,400 + $40,000 + $7,000 = $109,400
Blocher - Chapter 10 #59Difficulty: HardLearning Objective: 10-460. Tony's Fashions forecasts sales of $300,000 for the quarter ended December 31. Its gross profit rate is 20% of sales, and its September 30inventory is $100,000. If the December 31 inventory is targeted at $40,000, budgeted purchases for the quarter should be:
Blocher - Chapter 10 #60Difficulty: MediumLearning Objective: 10-461. Boone Co.'s sales are 20% for cash and 80% on credit. Credit sales are collected as follows: 40% in the month of sale, 50% in the month
after the sale, and 10% in the second month. On December 31, the accounts receivable balance is$54,000, of which $12,000 is fromNovember sales. Total sales for January and February are budgeted to be $100,000 and $120,000, respectively.What are the budgeted cash receipts for January?
Blocher - Chapter 10 #61Difficulty: MediumLearning Objective: 10-4

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture