Problem -
Martin Clothing Company is a retail company that sells hiking and other outdoor gear specially made for the desert heat. It sells to individuals as well as local companies that coordinate adventure getaways in the desert for tourists. The following information is available for several months of the current year:
|
Month
|
Sales
|
Purchases
|
Cash Expenses Paid
|
|
May
|
$98,000
|
$68,000
|
$19,000
|
|
June
|
120,000
|
88,000
|
27,000
|
|
July
|
135,000
|
117,000
|
36,250
|
|
August
|
132,000
|
74,000
|
35,000
|
The majority of Martin's sales (70 percent) are cash, but a few of the excursion companies purchase on credit. Of the credit sales, 35 percent are collected in the month of sale and 65 percent are collected in the following month. All of Martin's purchases are on account with 55 percent paid in the month of purchase and 45 percent paid the following month.
Required:
1. Determine budgeted cash collections for July and August.
2. Determine budgeted cash payments for July and August.