Question

Carmen's Dress Delivery operates a mail-order business that sells clothes designed for frequent travelers. It had sales of $730,000 in December. Because Carmen's Dress Delivery is in the mail-order business, all sales are made on account. The company expects a 23 percent drop in sales for January. The balance in the Accounts Receivable account on December 31 was 596,400 and is budgeted to be $72,500 as of January 31. Required a. Determine the amount of cash Carmen's Dress Delivery expects to collect from accounts receivable during January, Expected cash collection

Answer 1

Calculation of expected cash collections
Cash collections	Beginning receivable balance + Sales for current year - Ending receivable balance
Cash collections	96400+(730000*0.77)-72500
Cash collections	96400+562100-72500
Cash collections	$586,000
2
Supplies purchase budget is shown below
Supplies purchase budget
	January	February	March
Budgeted supplies expense	$55,000	$59,000	$65,000
Add: Desired ending supplies	$5,900	$6,500	$7,700
Total supplies needed	$60,900	$65,500	$72,700
Less: Beginning supplies	$5,500	$5,900	$6,500
Required purchases	$55,400	$59,600	$66,200
b.
Supplies expense for 1st quarter	55000+59000+65000
Supplies expense for 1st quarter	$179,000
c.
Ending supplies balance	$7,700
3.
Cash payment schedule is shown below
Schedule of cash payments for supplies purchases
	April	May	June
Payment for current accounts payable	$99,900	$117,900	$128,700
		131000*90%	143000*90%
Payment for previous accounts payable	$12,000	$11,100	$13,100
		111000*10%	131000*10%
Total budgeted payment for supplies	$111,900	$129,000	$141,800
Accounts payable balance	$14,300	143000*10%