Question

The following information is from Tejas WindowTint's financial records. Month April May June July Sales $ 79,000 76,000 74,000 82,000 Purchases $ 46,000 43,000 31,000 49,000 Collections from customers are normally 69 percent in the month of sale, 18 percent in the month following the sale, and 11 percent in the second month following the sale. The balance is expected to be uncollectible. All purchases are on account. Management takes full advantage of the 3 percent discount allowed on purchases paid for by the tenth of the following month. Purchases for August are budgeted at $64,000, and sales for August are forecasted at $70,000. Cash disbursements for expenses are expected to be $14,800 for the month of August. The company's cash balance on August 1 was $31,000. Required: 1. Prepare the expected cash collections during August. 2. Prepare the expected cash disbursements during August. 3. Calculate the expected cash balance on August 31.

Answer 1

Solutions:

AR SK 13 Month 14 June July 17 August Total Tejas Wondow Tint Expected cash Collection August Sales Percent 74000 69% 82000 18% 70000 11% 15 16 Expected collections 51060 14760 7700 73520 18 19 20 21 26 49000 1470 47530 14800 62330 Tejas Wondow Tint Expected cash Disbursements 24 August 25 July purchases to be paid in August Less: purchase discount(3%) 27 Net Cash disbursements for expenses 29 Total 30 31 Tejas Wondow Tint 33 Expected cash balance Aug-31 35 Balance, August 1 36 Add: Expected cash collections 37 Less: Expected cash disbursement Total 32 34 31000 73520 62330 42190 38 40 41 44 45 et233 ) Sheet34 Sheet260 ) Sheet261 Sheet263