Here are some important figures from the budget of Marston, Inc., for the second

Question

Here are some important figures from the budget of Marston, Inc., for the second quarter of 2016: April May June Credit sales Credit purchases Cash disbursements S414,000 S363,000 $451,000 191,000 79,000 212,000 Wages, taxes, and expenses Interest 80,900 10,600 39,000 76,400 105,100 10,600 11,500 159,000 10,600 Equipment purchases The company predicts that 5 percent of its credit sales will never be collected, 35 percent of its sales will be collected in the month of the sale, and the remaining 60 percent will be collected in the following month. Credit purchases will be paid in the month following the purchase. In March 2016, credit sales were S341,000 Using this information, complete the following cash budget: (Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.) April Ma June Beginning cash balance Cash receipts $ 121,000 Cash collections from credit sales Total cash available Cash disbursements Purchases Wages, taxes, and expenses Interest Equipment purchases $ 183,000 Total cash disbursements Ending cash balance Hints eBook & Resources sf ^di 9/19/20 5:41 PM O Type here to search

Explanation / Answer

Marston Inc Cash Budget for the second quarter 2016: (Amount in $) April May June Beginning Cash Balance 121000 571000 1019950 Cash Receipts: Cash Collection from credit Sales 763500 738450 826650 Total Cash Available     (A) 884500 1309450 1846600 Cash Disbursements: Purchases 183000 191000 179000 Wages,taxes and expenses 80900 76400 105100 Interest 10600 10600 10600 Equipment Purchases 39000 11500 159000 Total Cash Disbursement   (B) 313500 289500 453700 Ending Cash Balance (A-B) 571000 1019950 1392900 Credit Sales Working: 5% Sales will never be collected mar april may june 1) Credit Sales 341000 414000 363000 451000 5% Sales will never be collected 0 0 0 0 35% Sales will be Collected in Same Month (Credit sale of Month * 35%) 144900 127050 157850 E.g.April Sale =414000*35% 60 % Sales will be Collected in Next Month 204600 248400 217800 (Credit sale of Previous Month * 60%) E.g.April Sale =341000 *35% Total Collection From Credit Sales 763500 738450 826650 april may june 2) Purchases will be we paid in the next Month 191000 179000 Credit Purchases of April will be paid in the month of may 3) Assuming Wages,taxes and expenses,Equipment Purchases,Interest are paid in the same month

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