Farley Company has budgeted sales revenues as follows: June July August Cash Sales 255,000 195,000 Credit Sales
Question:
Farley Company has budgeted sales revenues as follows:
June | July | August | |
---|---|---|---|
Cash Sales | 255,000 | 195,000 | |
Credit Sales | 135,000 | 145,000 | 90,000 |
Total Sales | 135,000 | 400,000 | 285,000 |
Past experience indicates that 60% of the credit sales will be collected in the month of sale and the remaining 40% will be collected in the following month. Purchases of inventory are all on credit and 50% is paid in the month of purchase and 50% in the month following purchase. Budgeted inventory purchases are:
June | $300,000 |
---|---|
July | $250,000 |
August | $105,000 |
Find Other cash disbursements budgeted: (a) selling and administrative expenses of $48,000 each month, (b) dividends of $103,000 will be paid in July, and (c) purchase of equipment in August for $30,000 cash.
The company wishes to maintain a minimum cash balance of $50,000 at the end of each month. The company borrows money if necessary to maintain the minimum cash balance. Borrowed money is repaid in months when there is an excess cash balance. The beginning cash balance on July 1 was $50,000.
Financial & Managerial Accounting
ISBN: 978-1337902663
15th edition
Authors: Carl Warren, Jefferson P. Jones, William B. Tayler