Company X has the following income statement for the month ending September. Sal
ID: 2535991 • Letter: C
Question
Company X has the following income statement for the month ending September.
Sales 42,000
Cost of Goods Sold:
Beginning Inventory 6,000
Purchases 37,800
Cost of Goods Available for sale 43,800
Less: Ending Inventory (14,400)
Cost of Goods Sold 29,400
Gross Profit 12,600
Operating Expenses 10,500
Operating Profit 2,100
Sales are made on credit and collected as follows:
60 per cent in the month after the sale is made and
35 per cent in the second month after the sale
Purchases and Operating Expenses are paid as follows:
80 per cent purchased or the cost incurred
Cash on hand at 31 August is estimated to be $40,000. Collections of 31 August accounts receivable was estimated to be $24,000 and payments of accounts payable to be $34,000.
Prepare a cash budget for September
Explanation / Answer
Schedule of Expected Cash Collections from Sales Sep. Collection from Accounts Receivables Accounts Receivables - August 24,000.00 Sep Sales - Total cash Collections 24,000.00 Schedule of Cash payments for Purchases & Operating Expenses Sep. Cash Payment Accounts Payable - August 34,000.00 Sep Purchases - $37,800 X 80% 30,240.00 Operating Expenses - $10,500 X 80% 8,400.00 Total Cash Payment to Suppliers 72,640.00 Cash budget Sep Opening cash Balance 40,000.00 Add: receipts Collection from Customers 24,000.00 Total Cash available 64,000.00 Less: Disbursements Cash Disbursement - Accounts Payable & Operating Exp. 72,640.00 Total Disbursement 72,640.00 Cash Balance Closing (8,640.00)
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