Budgeted Cash Receipts and Cash Disbursements Timpco, a retailer, makes both cash andcredit sales (i.e., sales on open account). Information regarding budgeted sales for the last quarter ofthe year is as follows:October November DecemberCash sales $100,000 $ 120,000 $ 80,000Credit sales 100,000 150,000 90,000Total $200,000 $ 270,000 $ 170,000Past experience shows that 5% of credit sales are uncollectible. Of the credit sales that are collectible, 60% are collected in the month of sale; the remaining 40% are collected in the month followingthe month of sale. Customers are granted a 1.5% discount for payment within 10 days of billing.Approximately 75% of collectible credit sales take advantage of the cash discount.[LO 10-2, 10-4][LO 10-4][LO 10-4]Final PDF to printerblo17029_ch10_355-410.indd 390 02/19/18 09:08 AM390 Part Two Planning and Decision MakingInventory purchases each month are 100% of the cost of the following month’s projected sales.(The gross profit rate for Timpco is approximately 30%.) All merchandise purchases are made oncredit, with 25% paid in the month of purchase and the remainder paid in the following month. Nocash discounts for early payment are available.Required1. Calculate the budgeted total cash receipts for November and December.2. Calculate budgeted cash disbursements for November and December (budgeted total sales for January ofthe coming year equals $200,000).
Budgeted Cash Receipts and Cash Disbursements Timpco, a retailer, makes both cash and
credit sales (i.e., sales on open account). Information regarding budgeted sales for the last quarter of
the year is as follows:
October November December
Cash sales $100,000 $ 120,000 $ 80,000
Credit sales 100,000 150,000 90,000
Total $200,000 $ 270,000 $ 170,000
Past experience shows that 5% of credit sales are uncollectible. Of the credit sales that are collectible, 60% are collected in the month of sale; the remaining 40% are collected in the month following
the month of sale. Customers are granted a 1.5% discount for payment within 10 days of billing.
Approximately 75% of collectible credit sales take advantage of the cash discount.
[LO 10-2, 10-4]
[LO 10-4]
[LO 10-4]
Final PDF to printer
blo17029_ch10_355-410.indd 390 02/19/18 09:08 AM
390 Part Two Planning and Decision Making
Inventory purchases each month are 100% of the cost of the following month’s projected sales.
(The gross profit rate for Timpco is approximately 30%.) All merchandise purchases are made on
credit, with 25% paid in the month of purchase and the remainder paid in the following month. No
cash discounts for early payment are available.
Required
1. Calculate the budgeted total cash receipts for November and December.
2. Calculate budgeted cash disbursements for November and December (budgeted total sales for January of
the coming year equals $200,000).
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