Question

Timpco, a retailer, makes both cash and credit sales (ie, sales on open account). Information regarding budgeted sales for the last quarter of the year is as follows: Cash sales Credit sales Total October $ 100,00 160,000 5 200.000 November $ 120.000 150,000 $ 270, eee December $ 80,000 90,000 $ 170,000 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 15% 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 Timpcois approximately 30%.) All merchandise purchases are made on credit with 25% 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 discount factor to 3 decimals places. Round your other intermediate calculations and the 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 $200,000

Answer 1

Answer -

1. Calculate the amount of cash realized during the month of sale and following month of sale: October November Amount December Particulars ($) Amount (5) Amount ($) Credit sales (A) 100,000 150,000 90,000 Less: Uncollectibles @5% (B) 5,000 7,500 4,500 Collectible credit sales C)=(A)-(B)] 95,000 142,500 85,500 Cash collection : 60% current month [(C)x60%) 57,000 85,500 51,300 40% following month 0 95,000x40%=38,000 142,500x40%=57,000 Calculate amount realized after discount: On Gross Discount Months of Month of Receipt Discount Net receipts discount rate sale realsation (S) [(iv)=(i)x(ii)x(iii)][()=(i)-(iv)] (ii) (iii) (0) October November 38,000 75% 1.50% 427.50 37572.50 November November 85,500 75% 1.50% 961.881 84538.131 November December 57,000 1.50% 641.25 56358.751 December December 51,300 75% 1.50% 577.13 50722.88 75% Calculate budgeted total cash receipts for the month of November and December: November December 120,000.00 80,000.00 Particulars Cash sales Add: Credit sales- Collection of October month sale Collection of November month sale Collection for the month of December Total collection 37,572.50 84,538.13 56,358.75 50,722.88 242,110.63 187,081.63

2. Calculate budgeted cash payments for November and December: A 1 B October 200,000 60,000 140,000 с November 270,000 81,000 189,000 D December 170,000 51.000 119,000 E January 200,000 60,000 140,000 189,000 119,000 14,000,000 Particulars 2 Total sales (A) 3 Less: Gross profit (30% of sales) (B) 4 Cost of goods sold (C)=(A)-(B)] Inventory purchased 5 (100% of following month COGS) Cash payment current month-25% of 6 Inventory purchased Cash payment following month-75% 7 of Inventory purchased 8 Total cash payment 47,250 29,750 3,500,000 141,750 89,250 47,250 171,500 3,589,250 Prepare spreadsheet for the calculation of amounts in budgeted cash payments: 1 B с D Particulars October November December January 2 Total sales (A) 200000 270000 170000 200000 3 Less: Gross profit (30% of sales) (B) =B2*30% =C2*30% =D2*30% =E2*30% 4 Cost of goods sold [(C)=(A)-(B)] =B2-B3 =C2-C3 =D2-D3 =E2-E3 Inventory purchased 5 (100% of following month COGS) =C4*100% =D4*100% =E4*1000 Cash payment current month-25% of 6 Inventory purchased =B5*25% =C5*25% =D5*25% 0 Cash payment following month-75% of 7 Inventory purchased =B5*75% =C5*75% 0 8 Total cash payment =B6+B7 =C6+C7 =D6+D7EE6+E7

NOTE -

For question two

Total cash payment for December adjustment

D5 = 140000(wrongly taken as 14000000)

D6 = 35000 (wrongly taken as 3500000)

D6 = 89250

So answer is total cash payment for December is

=35000 + 89250 = 124,250

If u r satisfied plz give a like

In case of any doubts plz let me know tanq