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Miller Corporation has the following sales budget for the first four months of the current year

Miller Corporation has the following sales budget for the first four months of the current year:

 

MonthSales

January$400,000

February320,000

March440,000

April360,000

 

Historically, the following trend has been established regarding cash collection of sales:

 

65% in month of sale

25% in month following sale

8% in second month following sale

2% uncollectible

 

The company allows a 2% cash discount for payments made by customers during the month of the sale. November and December sales were $400,000 and $240,000, respectively.

 

Required: Prepare a schedule of budgeted cash collections from sales for January, February, and March.

 

 

17.Quillin Company had the following budgeted information for October:

 

1.October 1 cash balance $3,500

2.Expected sales 2,500 units at $25 each (half in cash, remainder on credit due in November)

3.Inventory purchases 3,000 units at $14 each (all in cash)

4.Rent $1,450

5.Payroll $1,000

6.Utilities and other costs $4,500

7.Accounts receivable balance Oct. 1, $35,000 (includes $700 bad debts allowance)

 

A.What is the budgeted collection on accounts receivable for October?

B.What are the total cash disbursements for October?

C.What is the ending cash balance for October?

D.Assuming sales are collected 75% in the month of sale and 25% the following month, what is the ending cash balance for October?

 

 

 

18.Fredder Company usually sells about 20% of its merchandise during a month for cash with the remaining sales on account. The company’s accounts receivable payment history is as follows: 30% in the month of sale, 50% in the month following, and 15% in the second month following sale. Total budgeted sales for the second quarter are as follows:

 

April$100,000

May120,000

June80,000

 

Assume all questions relate to the month of June.

 

A.What are the expected cash sales?

B.What are the expected receipts from accounts receivable for sales made in April?

C.What are the expected receipts from accounts receivable for sales made in May?

D.What are the total expected cash receipts?

E.From the above accounts receivable history information, receipts from accounts receivable do not equal 100%. Why not? Does this amount appear on the cash budget?

 

 

 

19.Rivers Company purchases merchandise on account. In general, Rivers pays 50% in the month of purchase and 50% in the following month. All payments in the month of purchase qualify for a 2% cash discount. First quarter budgeted purchases are:

 

January$90,000

February80,000

March96,000

 

A.What are the total cash disbursements expected in February?

B.What are the total cash disbursements expected in March?

C.Suppose that there is NO cash discount for purchases made in the month of purchase. Now what are the total cash disbursements expected in February? In March?

Mar 13 2020 View more View Less

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