Assume the following budgeted information for a merchandising company: 1. Budgeted sales (all on credit) for November, December, and January are $249,000, $219,000, and $210,000, respectively. 2. Cash collections of credit sales are expected to be 70% in the month of sale and 30% in the month following the sale. 3. The cost of goods sold is always 65% of sales. Each month's ending inventory equals 15% of next month's cost of goods sold. 4. 40% of each month's merchandise purchases are paid in the current month and the remainder is paid in the following month. 5. Monthly selling and administrative expenses that are paid in cash in the month incurred total $25,500. 6. Monthly depreciation expense is $25,000. What are the expected cash collections from customers in December?
Assume the following budgeted information for a merchandising company: 1. Budgeted sales (all on credit) for November, December, and January are $249,000, $219,000, and $210,000, respectively. 2. Cash collections of credit sales are expected to be 70% in the month of sale and 30% in the month following the sale. 3. The cost of goods sold is always 65% of sales. Each month's ending inventory equals 15% of next month's cost of goods sold. 4. 40% of each month's merchandise purchases are paid in the current month and the remainder is paid in the following month. 5. Monthly selling and administrative expenses that are paid in cash in the month incurred total $25,500. 6. Monthly depreciation expense is $25,000. What are the expected cash collections from customers in December?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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Transcribed Image Text:Assume the following budgeted information for
a merchandising company:
1. Budgeted sales (all on credit) for November,
December, and January are $249,000,
$219,000, and $210,000, respectively.
2. Cash collections of credit sales are expected
to be 70% in the month of sale and 30% in
the month following the sale.
3. The cost of goods sold is always 65% of
sales. Each month's ending inventory equals
15% of next month's cost of goods sold.
4. 40% of each month's merchandise
purchases are paid in the current month and
the remainder is paid in the following
month.
5. Monthly selling and administrative expenses
that are paid in cash in the month incurred
total $25,500.
6. Monthly depreciation expense is $25,000.
What are the expected cash collections from
customers in December?
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