The following information is from Tejas WindowTint's financial records. Month Sales Purchases April 73,000 47,000 May 70,000
Question:
The following information is from Tejas WindowTint's financial records.
Month | Sales | Purchases | |
April | 73,000 | 47,000 | |
May | 70,000 | 43,000 | |
June | 61,000 | 31,000 | |
July | 81,000 | 49,000 | |
Collections from customers are normally 66 percent in the month of sale, 16 percent in the month following the sale, and 17 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 2 percent discount allowed on purchases paid for by the tenth of the following month. Purchases for August are budgeted at $61,000, and sales for August are forecasted at $67,000. Cash disbursements for expenses are expected to be $14,800 for the month of August. The company's cash balance on August 1 was $28,000.
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.
Managerial Accounting Creating Value in a Dynamic Business Environment
ISBN: 978-1259569562
11th edition
Authors: Ronald W. Hilton