Question

Check my work Graham Potato Company has projected sales of $15,600 in September. $18,000 in October, $25,600 in November, and $21,600 in December. Of the company's sales, 25 percent are paid for by cash and 75 percent are sold on credit. Experience shows that 40 percent of accounts receivable are paid in the month after the sale, while the remaining 60 percent are paid two months after. Determine collections for November and December points Also assume Graham's cash payments for November and December are $21.500 and $14.000, respectively. The beginning cash balance in November is $5,000, which is the desired minimum balance. eBook a. Prepare a cash receipts schedule for November and December Hint Print References Graham Potato Company Cash Receipts Schedule September October $ 15,600 $ 18,000 11,700 13,500 Sales Credit sales Cash sales November December $ 25,600 $ 21,600 19,200 16,200 $ 6,4001 $ 5,400 One month after sale Two months after sale Total cash receipts $ 6,400 S 5.400

Answer 1

Solution: Graham Potato Company Cash Receipts Schedule September October $15,600 $18,000 $11,700 $13,500 Particulars Sales Credit sales (75%) cash sales (25%) one month after sales* two months after sales** Total cash receipts November December $25,600 $21,600 $19,200 $16,200 $6,400 $5,400 $5,400 $7,680 $7,020 $8,100 $18,820 $21,180 * one month after sale is 40% of credit sales ** two months after sale is 60% of credit sales Graham Potato Company Cash Budget Particulars November December Total Cash receipts $ 18,820 $ 21,180 Total Cash payments $ (21,500) $ (14,000) Net cash flow $ (2,680) $ 7,180 Beginning cash balance $ 5,000 $ 5,000 Cumulative Cash Balance $ 2,320 $ 12,180 Monthly Loan or (Repayment) $ 2,680 $ (2,680) Cumulative Loan Balance $ 2,680 Ending Cash Balance $ 5,000 $ 9,500