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Chapter 22: Q15SE (page 1231)

Preparing a financial budget鈥攕chedule of cash receipts

Victors expects total sales of \(702,000 for January and \)349,000 for February. Assume that Victor'ssales are collected as follows:

50% in the month of the sale

30% in the month after the sale

16% two months after the sale

4% never collected

November sales totaled \(388,000, and December sales were \)407,000. Prepare a schedule of cash receipts from customers for January and February. Round answers to the nearest dollar.

Short Answer

Expert verified

Answer

Total cash receipts from the customers is $535,180 in the month of January and $450,220 in the month of February.

Step by step solution

01

Meaning of schedule of cash receipts

The structure and table formed for measuring the cash balances in the form of gained.

02

Preparation of schedule of cash receipts

Particulars

January

February

Total budgeted sales

$702,000

$349,000

Cash receipts from customers:



50 % in the month of sale

$351,000

$174,500

30% in the month after sale

$407,000*30% =$122,100

$702,000*30% =$210,600

16% two months after sales

$388,000*16% =$62,080

$407,000*16% =$65,120

Total cash receipts from customers

$535,180

$450,220

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Most popular questions from this chapter

Preparing an operating budget鈥攕ales budget

Yarbrough Company manufactures T-shirts printed with tourist destination logos. The following table shows sales prices and projected sales volume for the summer months:

Projected Sales in Units T-Shirt Sizes Sales Price June July August Youth $ 7 575 500 525 Adult鈥攔egular 17 625 900 825 Adult鈥攐versized 18 400 500 475 Prepare a sales budget for Yarbrough Company for the three months.

What budgets are included in the financial budget for a merchandising company?

Preparing a financial budget鈥攕chedule of cash receipts and schedule of cash payments

Agua Cool is a distributor of bottled water. For each of the items, compute the amount of cash receipts or payments Agua Cool will budget for September. The solution to one item may depend on the answer to an earlier item.

a. Management expects to sell equipment that cost \(14,000 at a gain of \)7,000. Accumulated depreciation on this equipment is \(5,000.

b. Management expects to sell 7,100 cases of water in August and 9,000 cases in September. Each case sells for \)14. Cash sales average 20% of total sales, and credit sales make up the rest. Three-fourths of credit sales are collected in the month of the sale, with the balance collected the following month.

c. The company pays rent and property taxes of $4,500 each month. Commissions and other selling expenses average 30% of sales. Agua Cool pays one-half of commissions and other selling expenses in the month incurred, with the balance paid the following month.

Preparing an operating budget鈥攑roduction budget Bailey Company expects to sell 1,500 units of finished product in January and 1,750 units in February. The company has 180 units on hand on January 1 and desires to have an ending inventory equal to 80% of the next month鈥檚 sales. March sales are expected to be 1,820 units. Prepare Bailey鈥檚 production budget for January and February.

Match the following statements to the appropriate budgeting objective or benefit: developing strategies, planning, directing, controlling, coordinating and communicating, and benchmarking.

1. Managers are required to think about future business activities.

2. Managers use feedback to identify corrective action.

3. Managers use results to evaluate employees鈥� performance.

4. Managers work with managers in other divisions.
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