ey during this quarter. Extracts from the sales and purchases budgets are as follows: Month               cash sales           sales on account      purchases August               $85,000                     $640,000              $420,000 September       $70,000                      $550,000              $550,000 October             $ 88,550                    $600,000              $500,000 November         $77,160                     $800,000              $600,000 December       $174,870                    $500,000               $450,000 Expected purchases include monthly cash purchases of 5%. All other purchases are on account. Accounts payable are settled as follows, in accordance with the credit terms – 2/30, n60: 60% in the month in which the inventory is purchased 40% in the following month 2. A schedule of budgeted cash collections for tra

Fundamentals Of Financial Management, Concise Edition (mindtap Course List)
10th Edition
ISBN:9781337902571
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Eugene F. Brigham, Joel F. Houston
Chapter15: Working Capital Management
Section: Chapter Questions
Problem 10P: CASH BUDGETING Helen Bowers, owner of Helens Fashion Designs, is planning to request a line of...
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The management accountant at Miller Merchandising & More, Odail Russell is in the process of
preparing the cash budget for the business for the fourth quarter of 2021. It is customary for the
business to borrow money during this quarter. Extracts from the sales and purchases budgets are
as follows:
Month               cash sales           sales on account      purchases
August               $85,000                     $640,000              $420,000
September       $70,000                      $550,000              $550,000
October             $ 88,550                    $600,000              $500,000
November         $77,160                     $800,000              $600,000
December       $174,870                    $500,000               $450,000

Expected purchases include monthly cash purchases of 5%. All other purchases are on account. Accounts payable are settled as follows, in accordance with the credit terms –
2/30, n60:

60% in the month in which the inventory is purchased
40% in the following month

2. A schedule of budgeted cash collections for trade receivables (sales on account) for each of the months October to December.

 

 

 

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