1. Business
  2. Accounting
  3. q215 marks the doley company has planned the following sales...

Question: q215 marks the doley company has planned the following sales...

Question details

Q2.(15 marks) The Doley Company has planned the following sales for the next three months: January Budgeted Sales $40,000 February $50,000 March $70,000 Sales are made 20% for cash and 80% on account. From experience, the company has learned that a months sales on account are collected according to the following pattern: Month of sale First month following sale second month following sale Uncollectible 60% 30% 8% 2%
The company requires a minimum cash balance of $5,000 to start a month. The beginning cash balance in March is budgeted to be $6,000. Required a) Compute the budgeted cash receipts for March. Rember to think in terms of when actual cash is planned to be received. If you are not going to receive the cash it is not part of the budget. Also pay close attention to cash vs credit sales b) The following additional information has been provided for March: Inventory purchases (all paid in cash in Operating Expenses (all paid in cash in Depreciation expense for March $28,000 $40,000 $5,000 March) March) Dividends paid in March $4,000 Prepare a cash budget in good form for the month of March, using this information and the budgeted cash receipts you computed for part a) above. The company can borrow in any dollar amount and will not pay interest until April.
Solution by an expert tutor
Blurred Solution
This question has been solved
Subscribe to see this solution