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 $ 155, 000 155, 000 November $ 127, 000 152, 400 December $ 111, 000 122, 100 Cash sales Credit sales Total $ 310, 000 $ 279, 400 $ 233, 100 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. 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 20% paid in the month of purchase and the remainder paid in the following month. No cash discounts for early payment are in effect. Required: 1. Calculate the budgeted total cash receipts for November and December. (Round your intermediate calculations and final answers to the nearest whole dollar amount.) 2. Calculate budgeted cash disbursements for November and December (budgeted total sales for January of the coming year equals $214,000).
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 $ 155, 000 155, 000 November $ 127, 000 152, 400 December $ 111, 000 122, 100 Cash sales Credit sales Total $ 310, 000 $ 279, 400 $ 233, 100 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. 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 20% paid in the month of purchase and the remainder paid in the following month. No cash discounts for early payment are in effect. Required: 1. Calculate the budgeted total cash receipts for November and December. (Round your intermediate calculations and final answers to the nearest whole dollar amount.) 2. Calculate budgeted cash disbursements for November and December (budgeted total sales for January of the coming year equals $214,000).
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:1
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:
November
$ 127, 000
152, 400
October
December
Cash sales
$ 155, 000
$ 111, 000
Credit sales
155, 000
122, 100
Total
$ 310, 000
$ 279, 400
$ 233, 100
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.
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 20% paid in the month of purchase and the remainder paid in
the following month. No cash discounts for early payment are in effect.
Required:
1. Calculate the budgeted total cash receipts for November and December. (Round your intermediate calculations and final answers
to the nearest whole dollar amount.)
2. Calculate budgeted cash disbursements for November and December (budgeted total sales for January of the coming year equals
$214,000).
November
December
1.
Total cash receipts
2. Budgeted cash disbursements
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