Maris is preparing a cash budget for her new business. She expects her sales for the first
Question:
Maris is preparing a cash budget for her new business. She expects her sales for the first six months to be:
Maris expects that 25% of the sales will be paid for immediately, while 50% will be paid for in the month following the sale, with the remainder paid for two months after. There is no inventory, as Maris expects to purchase what she sells in the same month, but she makes her purchases on one month's credit. Maris makes a 25% gross profit margin on sales.
REQUIRED:
a) Calculate the purchases Maris will need to make each month.
b) Calculate how much cash she will receive from sales each month from January to June.
¢) Calculate how much cash she will pay out for purchases each month from January to June.
Step by Step Answer:
Accounting A Smart Approach
ISBN: 9780199587414
1st Edition
Authors: Mary Carey, Jane Towers Clark, Cathy Knowles