Computing budgeted cash payments for purchases

Question # 00019180 Posted By: expert-mustang Updated on: 07/05/2014 02:36 AM Due on: 07/05/2014
Subject Accounting Topic Accounting Tutorials:
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III. Computing budgeted cash payments for purchases

Powerdyne Company’s cost of goods sold is consistently 60% of sales. The company plans to carry ending merchandise inventory for each month equal to 40% of the next month’s budgeted cost of goods sold. All merchandise is purchased on credit, and 50% of the purchases made during a month is paid for in that month. Another 35% is paid for during the first month after purchase, and the remaining 15% is paid for during the second month after purchase.

Expected dollar sales are:
August (actual), $150,000
September (actual), $350,000
October (estimated), $200,000
November (estimated) $300,000.

Use this information to determine October’s expected cash payments for purchases.

IV. Budgeted Cash Receipts
Emily Company has sales on account and sales for cash. Specifically, 60% of its sales are on account and 40% are for cash. Credit sales are collected in full in the month following the sale. The company forecasts sales of $525,000 for April, $535,000 for May, and $560,000 for June. The beginning balance of Accounts Receivable on April 1 is $300,000.

Prepare a schedule of budgeted cash receipts for April, May, and June.
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  1. Tutorial # 00018564 Posted By: expert-mustang Posted on: 07/05/2014 02:37 AM
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