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Exercise 8-13 (30 minutes)
1. Schedule of expected cash collections:
Month
July
August
September
Quarter
From accounts receivable .
$136,000
$136,000
From July sales:
45% × 210,000 ............
94,500
94,500
55% × 210,000 ............
$115,500
115,500
From August sales:
45% × 230,000 ............
103,500
103,500
55% × 230,000 ............
$126,500
126,500
From September sales:
45% × 220,000 ............
99,000
99,000
Total cash collections .......
$230,500
$219,000
$225,500
$675,000
2. a. Merchandise purchases budget:
July
August
Sept.
Total
Budgeted cost of goods sold ....
$126,000
$138,000
$132,000
$396,000
Add desired ending
merchandise inventory* ........
27,600
26,400
28,800
28,800
Total needs .............................
153,600
164,400
160,800
424,800
Less beginning merchandise
inventory ..............................
62,000
27,600
26,400
62,000
Required purchases .................
$ 91,600
$136,800
$134,400
$362,800
*At July 31: $138,000 × 20% = $27,600.
b. Schedule of cash disbursements for purchases:
July
August
Sept.
Total
From accounts payable ..........
$ 71,100
$ 71,100
For July purchases .................
27,480
$ 64,120
91,600
For August purchases ............
41,040
$ 95,760
136,800
For September purchases ......
40,320
40,320
Total cash disbursements .......
$ 98,580
$105,160
$136,080
$339,820
