Chapter 8, Problem 8.25P

a.

To determine

Introduction:

Cash collection schedule:

A cash collection schedule refers to the amount which is receivable for the business enterprise in different time periods.

Given Information: Company G assumes that sales will continue to 20% for cash and 80% on credit, April to June period 25%, 65%, and 10% respectively. Its ending inventory levels from April to June at 15% of the cost of the merchandise and the merchandise inventory in March end is $84,000 with a $126,000 payable amount.

Requirement 1

To prepare: A schedule of expected cash collections for April, May, and June, and the quarter in total.

b.

To determine

Introduction:

Merchandise purchases budget:

Forecasted costs and several merchandise inventories are considered in a merchandise purchases budget that a retailer can purchase in a particular accounting period.

Given Information: Company G assumes that sales will continue to 20% for cash and 80% on credit, April to June period 25%, 65%, and 10% respectively. Its ending inventory levels from April to June at 15% of the cost of the merchandise and the merchandise inventory in March end is $84,000 with a $126,000 payable amount.

Requirement 2

To prepare: (a) A merchandise purchases budget for April, May, and June and (b) a schedule of expected cash disbursements for merchandise purchases for April, May, June, and Quarters in total.

c.

To determine

Introduction:

Cash budget:

A cash budget refers to the forecasted cash flow of a business enterprise in a particular time period.

Given Information: Company G assumes that sales will continue to 20% for cash and 80% on credit, April to June period 25%, 65%, and 10% respectively. Its ending inventory levels from April to June at 15% of the cost of the merchandise and the merchandise inventory in March end is $84,000 with a $126,000 payable amount.

Requirement 3

To prepare: A cash budget for April, May, June, and Quarters in total.

d.

To determine

Introduction:

Cash budget:

A cash budget refers to the forecasted cash flow of a business enterprise in a particular time period.

Given Information: Company G assumes that sales will continue to 20% for cash and 80% on credit, April to June period 25%, 65%, and 10% respectively. Its ending inventory levels from April to June at 15% of the cost of the merchandise and the merchandise inventory in March end is $84,000 with a $126,000 payable amount.

Requirement 4

To prepare: A brief memorandum for the company’s president that shows how his revised assumptions affect the cash budget.