Information pertaining to Noskey Corporations sales revenue follows: November December January 2009 (Actual) 2009 (Budgeted) 2010 (Budgeted)
Question:
Information pertaining to Noskey Corporation’s sales revenue follows:
November | December | January | ||||
2009 (Actual) | 2009 (Budgeted) | 2010 (Budgeted) | ||||
Cash Sales | $80,000 | $100,000 | $60,000 | |||
Credit Sales | $240,000 | $360,000 | $180,000 | |||
TOTAL Sales | $320,000 | $460,000 | $240,000 |
Management estimates 5 percent of credit sales to be uncollectible. Of collectible credit sales, 60 percent is collected in the month of sale and the remainder in the month following the month of sale. Purchases of inventory each month include 70 percent of the next month’s projected total sales (stated at cost) plus 30% of projected sales for the current month (stated at cost). All inventory purchases are on account; 25 percent are paid in the month of purchase, and the remainder is paid in the month following the month of purchase. Purchase costs are approximately 60 percent of the selling price.
Estimated collections in month of sale | 60% | ||||
Estimated collections in first month following month of sale | 40% | ||||
Estimated provision for bad debts in month of sale | 5% | ||||
Inventory purchases as a percent of next month's projected sales | 70% | ||||
Inventory purchases paid in the month of purchase | 25% | ||||
Inventory purchases paid in the month after purchase | 75% | ||||
Purchase costs as a percent of selling price | 60% |
Required
Determine for Noskey:
1. Budgeted cash collections in December 2009 from November 2009 credit sales.
2. Budgeted total cash receipts in January 2010.
3. Budgeted total cash payments in December 2009 for inventory purchases.
Step by Step Answer:
Cost management a strategic approach
ISBN: 978-0073526942
5th edition
Authors: Edward J. Blocher, David E. Stout, Gary Cokins