FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Timpco, a retailer, makes both cash and credit sales (i.e., sales on open account). Information regarding budgeted sales for the last
quarter of the year is as follows:
Cash sales
Credit sales
Total
October
$ 95,000
95,000
November
$ 83,000
99,600
December
$ 89,000
97, 900
$ 190,000
$ 182,600
$ 186,900
Past experience shows that 5% of credit sales are uncollectible. Of the credit sales that are collectible, 60% are collected in the month
of sale; the remaining 40% are collected in the month following the month of sale. Customers are granted a 1.5% discount for payment
within 10 days of billing. Approximately 75% of collectible credit sales take advantage of the cash discount.
Inventory purchases each month are 100% of the cost of the following month's projected sales. (The gross profit rate for Timpco is
approximately 30%.) All merchandise purchases are made on credit, with 20% paid in the month of purchase and the remainder paid in
the following month. No cash discounts for early payment are available.
Required:
1. Calculate the budgeted total cash receipts for November and December. (Round your final answers to the nearest whole dollar
amount.)
2. Calculate budgeted cash disbursements for November and December (budgeted total sales for January of the coming year equals
$181,000).
1. Total cash receipts
2. Budgeted cash disbursements
November
December
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Transcribed Image Text:Timpco, a retailer, makes both cash and credit sales (i.e., sales on open account). Information regarding budgeted sales for the last quarter of the year is as follows: Cash sales Credit sales Total October $ 95,000 95,000 November $ 83,000 99,600 December $ 89,000 97, 900 $ 190,000 $ 182,600 $ 186,900 Past experience shows that 5% of credit sales are uncollectible. Of the credit sales that are collectible, 60% are collected in the month of sale; the remaining 40% are collected in the month following the month of sale. Customers are granted a 1.5% discount for payment within 10 days of billing. Approximately 75% of collectible credit sales take advantage of the cash discount. Inventory purchases each month are 100% of the cost of the following month's projected sales. (The gross profit rate for Timpco is approximately 30%.) All merchandise purchases are made on credit, with 20% paid in the month of purchase and the remainder paid in the following month. No cash discounts for early payment are available. Required: 1. Calculate the budgeted total cash receipts for November and December. (Round your final answers to the nearest whole dollar amount.) 2. Calculate budgeted cash disbursements for November and December (budgeted total sales for January of the coming year equals $181,000). 1. Total cash receipts 2. Budgeted cash disbursements November December
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