The following information is from White Mountain Furniture Showroom’s financial

Question

The following information is from White Mountain Furniture Showroom’s financial records. Month Sales Purchases July $ 80,000 $ 42,000 August 68,000 47,000 September 67,000 35,000 October 86,000 53,000 Collections from customers are normally 67 percent in the month of sale, 20 percent in the month following the sale, and 11 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 3 percent discount allowed on purchases paid for by the tenth of the following month. Purchases for November are budgeted at $66,000, and sales for November are forecasted at $72,000. Cash disbursements for expenses are expected to be $14,800 for the month of November. The company’s cash balance on November 1 was $31,000.

Prepare the schedule for expected cash collections during November.

Prepare the schedule for expected cash disbursements during November.

Explanation / Answer

Particulars July August September October November Sales 80000 68000 67000 86000 72000 Collections: Purchases 42000 47000 35000 53000 66000 In the Month 67% In the First Month 20% In the Second Month 11% 1 Schedule of Expected Cash Collections: November Uncollectible 2% For the Nov Sales(72000*67%) 48240 Total 100% For the Oct Sales(86000*20%) 17200 For the Sep Sales(67000*11%) 7370 Total Collections 72810 2 Schedule of Expected Cash Payments: November For the Oct Month Purchases 51410 (53000*(100-3%) For Expense 14800 Total Payments 66210 3 Expected Cash Balance: November Opening Cash Balance 31000 Add: Total Collections 72810 Total Cash Available 103810 Less: Total Payments 66210 Closing Cash Balance 37600

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

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