The following information is from Binghamton Firm Corporations financial records

Question

The following information is from Binghamton Firm Corporations financial records. Collections from customers are normally 65 percent in the month of sale, 19 percent in the month following the sale, and 14 percent in the second month following the sale. The balance is expected to be uncollectible. All purchases are on account. Management takes full advantage of the 4 percent discount allowed on purchases paid for by the tenth of the following month. Purchases for August are budgeted at $70,000, and sales for August are forecasted at $76,000. Cash disbursements for expenses are expected to be $15,600 for the month of August. The company's cash balance on August 1 was $34,000. Required: 1. Prepare the expected cash collections schedule during August. (Omit the "$" & "%" signs in your response.) Prepare the expected cash disbursements schedule during August. (Omit the "$" sign in your response.) Calculate the expected cash balance on August 31. (Omit the "$" sign in your response.)

Explanation / Answer

MONTH

SALES

PERCENT

EXPECTED COLLECTIONS

JUNE

70000

14%

70000*14%

= 9800

JULY

84000

19%

84000*19%

=15960

AUGUST

76000

65%

76000*65%

=49400

TOTAL

$75160

PARTICULARS

AMOUNT($)

JULY PURCHASES TO BE PAID IN AUGUST

54000

LESS:- DISCOUNT TO BE RECEIVED [4% OF 54000]

(2160)

NET PAYMENT TO BE MADE

51840

CASH DISBURSEMENTS FOR EXPENSES

15600

TOTAL

$67440

EXPECTED CASH BALANCE:-

OPENING CASH BALANCE AS ON AUGUST -1 = 34000

ADD:- EXPECTED CASH COLLECTIONS FOR AUGUST = 75160

LESS:-EXPECTED CASH DISBURSEMENT FOR AUGUTST = (67440)

CLOSING CASH BALANCE AS ON AUGUST 31 = 41720

MONTH

SALES

PERCENT

EXPECTED COLLECTIONS

JUNE

70000

14%

70000*14%

= 9800

JULY

84000

19%

84000*19%

=15960

AUGUST

76000

65%

76000*65%

=49400

TOTAL

$75160

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.