3/2020 Forum: Accounting Discussion - Chapter 22 Budgetary Planning &... Budgeted Sales $300,000 Budgeted D.M. Purchases $45,000 April May 320,000 54,000 June 370,000 60,000 Moorcroft's sales are 40% cash and 60% credit, Credit sales are collected 20% in the month of sale, 50% in the month following sale, and 26% in the second month following sale; 4% are uncollectible. Moorcroft's purchases are 50% cash and 50% on account. Purchases on account are paid 40% in the month following the purchase and 60% in the second month following the purchase. Instructions a. Prepare a schedule of expected collections from customers for June. b. Prepare a schedule of expected payments for direct materials for June. c. Moorcroft's assistant controller suggested that Moorcroft hire a part time collector to encourage customers to pay more promptly and to reduce the amount of uncollectible accounts. Sales are still 40% cash and 60% credit but the assistant controller predicted that this would cause credit sales to be collected 30% in the month of the sale, 50% in the month following sale, and 18% in the second month following sale; 2% are uncollectible. (1) Prepare a schedule of expected collections from customers for June. How did these changes impact cash collections? Would it be worth paying the collector $1,000 per month? 1. The assistant controller also suggested that the company switch their purchases to 40% cash and 60% on account to help stretch out their cash payments. There is no additional interest charge to do this and Moorcroft is still paying their bills on time. There is no change to the company's payment pattern. 1. Prepare a schedule of expected payments for direct materials for June. 2. How did these changes impact the cash payments for June?
3/2020 Forum: Accounting Discussion - Chapter 22 Budgetary Planning &... Budgeted Sales $300,000 Budgeted D.M. Purchases $45,000 April May 320,000 54,000 June 370,000 60,000 Moorcroft's sales are 40% cash and 60% credit, Credit sales are collected 20% in the month of sale, 50% in the month following sale, and 26% in the second month following sale; 4% are uncollectible. Moorcroft's purchases are 50% cash and 50% on account. Purchases on account are paid 40% in the month following the purchase and 60% in the second month following the purchase. Instructions a. Prepare a schedule of expected collections from customers for June. b. Prepare a schedule of expected payments for direct materials for June. c. Moorcroft's assistant controller suggested that Moorcroft hire a part time collector to encourage customers to pay more promptly and to reduce the amount of uncollectible accounts. Sales are still 40% cash and 60% credit but the assistant controller predicted that this would cause credit sales to be collected 30% in the month of the sale, 50% in the month following sale, and 18% in the second month following sale; 2% are uncollectible. (1) Prepare a schedule of expected collections from customers for June. How did these changes impact cash collections? Would it be worth paying the collector $1,000 per month? 1. The assistant controller also suggested that the company switch their purchases to 40% cash and 60% on account to help stretch out their cash payments. There is no additional interest charge to do this and Moorcroft is still paying their bills on time. There is no change to the company's payment pattern. 1. Prepare a schedule of expected payments for direct materials for June. 2. How did these changes impact the cash payments for June?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:3/2020
Forum: Accounting Discussion - Chapter 22 Budgetary Planning &...
Budgeted Sales
$300,000
Budgeted D.M. Purchases
$45,000
April
May
320,000
54,000
June
370,000
60,000
Moorcroft's sales are 40% cash and 60% credit, Credit sales are collected 20% in the month of sale, 50% in
the month following sale, and 26% in the second month following sale; 4% are uncollectible. Moorcroft's
purchases are 50% cash and 50% on account. Purchases on account are paid 40% in the month following
the purchase and 60% in the second month following the purchase.
Instructions
a. Prepare a schedule of expected collections from customers for June.
b. Prepare a schedule of expected payments for direct materials for June.
c. Moorcroft's assistant controller suggested that Moorcroft hire a part time collector to encourage
customers to pay more promptly and to reduce the amount of uncollectible accounts. Sales are still
40% cash and 60% credit but the assistant controller predicted that this would cause credit sales to be
collected 30% in the month of the sale, 50% in the month following sale, and 18% in the second month
following sale; 2% are uncollectible.
(1) Prepare a schedule of expected collections from customers for June.
How did these changes impact cash collections? Would it be worth
paying the collector $1,000 per month?
1. The assistant controller also suggested that the company switch their purchases to
40% cash and 60% on account to help stretch out their cash payments. There is
no additional interest charge to do this and Moorcroft is still paying their bills on
time. There is no change to the company's payment pattern.
1. Prepare a schedule of expected payments for direct
materials for June.
2. How did these changes impact the cash payments for
June?
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