26. Cave Hardware\'s forecasted sales for April, May, June, and July are $240,00

Question

26. Cave Hardware's forecasted sales for April, May, June, and July are $240,000, $290,000, $100,000, and $230,000, respectively. Sales are 70% cash and 30% credit with all accounts receivables collected in the month following the sale. Cost of goods sold is 85% of sales and ending inventory is maintained at $50,000 plus 20% of the following month's cost of goods sold. All inventory purchases are paid 28% in the month of purchase and 72% in the following month. What are the cash collections budgeted for June at Cave Hardware? A.$157,000 B.$70,000 C.$107,000 D.$191,000

Explanation / Answer

Answer:

Cash collection budgeted June = $ 157,000

Working notes for the above answer is as under

May Credit sale
=290,000*30%*100%

87000

June Cash sale
=100,000*70%

70000

Cash collection budgeted June

157000

May Credit sale
=290,000*30%*100%

87000

June Cash sale
=100,000*70%

70000

Cash collection budgeted June

157000

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