1. The LaGrange Corporation had the following budgeted sales for the first half
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Question
1. The LaGrange Corporation had the following budgeted sales for the first half of the current year:
The company is in the process of preparing a cash budget and must determine the expected cash collections by month. To this end, the following information has been assembled:
Collections on sales:
50% in month of sale
35% in month following sale
15% in second month following sale
The accounts receivable balance on January 1 of the current year was $65,000, of which $52,000 represents uncollected December sales and $13,000 represents uncollected November sales.
What is the budgeted accounts receivable balance on May 31?
2. Bramble Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow:
Sales are budgeted at $240,000 for November, $220,000 for December, and $210,000 for January.
Collections are expected to be 65% in the month of sale and 35% in the month following the sale.
The cost of goods sold is 70% of sales.
The company would like maintain ending merchandise inventories equal to 60% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase.
Other monthly expenses to be paid in cash are $23,000.
Monthly depreciation is $14,000.
Ignore taxes.
Balance Sheet
October 31
December cash disbursements for merchandise purchases would be:
Thanks for answering these questions.
Cash sales Credit sales January $70,000 $170,000 February $75,000 $190,000 March $32,000 $150,000 April $27,000 $112,000 May $37,000 $220,000 June $100,000 $60,000Explanation / Answer
SOLUTION
1. Accounts Receivable -
April Credit sales- $112,000 *15% = $16,800
May Credit sales - $220,000 *50% = $110,000
Budgeted accounts receivable balance on May 31 = $16,800 + $110,000 = $126,800.
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