Question

Timpco, a retailer, makes both cash and credit sales (i.e., sales on open account). Information regarding budgeted sales for the last quarter of the year is as follows:

	October			November			December
Cash sales	$	125,000		$	103,000		$	99,000
Credit sales		125,000			123,600			108,900
Total	$	250,000		$	226,600		$	207,900

Past experience shows that 5% of credit sales are uncollectible. Of the credit sales that are collectible, 60% are collected in the month of sale; the remaining 40% are collected in the month following the month of sale. Customers are granted a 1.5% discount for payment within 10 days of billing. Approximately 75% of collectible credit sales take advantage of the cash discount.

Inventory purchases each month are 100% of the cost of the following month’s projected sales. (The gross profit rate for Timpco is approximately 30%.) All merchandise purchases are made on credit, with 20% paid in the month of purchase and the remainder paid in the following month. No cash discounts for early payment are in effect.

Required:

1. Calculate the budgeted total cash receipts for November and December. (Round your intermediate calculations and final answers to the nearest whole dollar amount.)

2. Calculate budgeted cash disbursements for November and December (budgeted total sales for January of the coming year equals $196,000).

		November	December
1	Total cash receipts
2	Budgeted cash disbursements

Answer 1

ans 1
Total cash receipts
	November	December
Cash sales	$103,000	99000
Cash collected from customer	116631	107877
Budgetd cash receipts	$219,631	$206,877
	October	November	December
Collectible credit sales C	118750	117420	103455
	(125000*95%)	(123600*95%)	(108900*95%)
60% in month of sales C*60%	71250	70452	62073
40% in next month		47500	46968
		(118750*.4)	(117420*.4)
Less: cash discount C*75%*1.5		-1321	-1164
Toral cash collected		116631	107877
ans 2
	November	December
Budgeted cash disbursements	156002	143864
working
	October	November	December
Cost of sales (70%*following month sales) S	158620	145530	137200
	(.7*226600)	(.7*207900)	(196000*.7)
20% in month same month S*.2	31724	29106	27440
80% in next month		126896	116424
		(158620*.8)	(145530*.8)
Total		156002	143864
If any doubt please comment