Homework SoursePLEASE EXPLAIN EACH STEP 3 Following are Arbor Cos budgeted
PLEASE EXPLAIN EACH STEP
3. Following are Arbor Co.\'s budgeted levels for 4th quarter Sales Purchases Expenses October 7,000 4,000 $ November December 9,000 12,000 5,000 7.000 900 700 800 * Sales are 10% cash, 90% credit, credit sales are collected 40% in month of sale 60% in month following sale Purchases are all credit, paid 20% month of purchase, 80% month following purchase *Expenses are paid in cash each month A. What are the company\'s expected cash collections during November? B. What are the company\'s expected cash disbursements during November? C. What is the company\'s expected November 30th balance in Accounts Receivable? D. What is the company\'s expecte Dember 31st balance in Accounts Payable?Solution
Answers
Working 1:
Oct
Nov
Dec
Total
Total Sales
$ 7,000.00
$ 9,000.00
$ 12,000.00
$ 28,000.00
Cash Sale = 10%
$ 700.00
$ 900.00
$ 1,200.00
$ 2,800.00
Credit Sale = 90%
$ 6,300.00
$ 8,100.00
$ 10,800.00
$ 25,200.00
40% of credit sale
$ 2,520.00
$ 3,240.00
$ 4,320.00
$ 10,080.00
60% of credit sale
$ 3,780.00
$ 4,860.00
$ 6,480.00
$ 15,120.00
Working 2:
Cash collected from:
Oct
Nov
Dec
Total cash collection
Cash Sales
$ 700.00
$ 900.00
$ 1,200.00
$ 2,800.00
Oct Credit Sale
$ 2,520.00
$ 3,780.00
$ 6,300.00
Nov Credit Sale
$ 3,240.00
$ 4,860.00
$ 8,100.00
Dec Credit Sale
$ 4,320.00
$ 4,320.00
Total Cash collected
$ 3,220.00
$ 7,920.00
$ 10,380.00
$ 21,520.00
----Answer: Expected Cash collection during November = $ 7,920 [Working 2]
Working 3:
Oct
Nov
Dec
Total
Total Purchases
$ 4,000.00
$ 5,000.00
$ 7,000.00
$ 16,000.00
20% of credit purchases
$ 800.00
$ 1,000.00
$ 1,400.00
$ 3,200.00
80% of credit purchases
$ 3,200.00
$ 4,000.00
$ 5,600.00
$ 12,800.00
Working 4
Cash disbursement for
Oct
Nov
Dec
Total Cash disbursement
Purchases in:
Oct
$ 800.00
$ 3,200.00
$ 4,000.00
Nov
$ 1,000.00
$ 4,000.00
$ 5,000.00
Dec
$ 1,400.00
$ 1,400.00
Expenses
$ 900.00
$ 700.00
$ 800.00
$ 2,400.00
Total cash disbursed
$ 1,700.00
$ 4,900.00
$ 6,200.00
$ 12,800.00
----Answer: Expected Cash disbursement during November = $ 4,900 [Working 4]
Accounts receivables
Oct Credit Sale
$ 6,300.00
Oct cash collected from credit sale
$ (2,520.00)
Oct Ending Balance
$ 3,780.00
Nov Credit Sale
$ 8,100.00
Oct credit sale collected
$ (3,780.00)
Nov Credit Sale collected
$ (3,240.00)
Nov 30 Ending balance
$ 4,860.00
----November 30th Ending balance of $ 4,860 (Answer) can also be calculated as November Credit Sale x 60% = 8100 x 60% = $ 4,860
Accounts Payable
Oct Credit Purchases
$ 4,000.00
Oct purchases cash paid
$ (800.00)
Oct Ending Balance
$ 3,200.00
Nov Credit purchase
$ 5,000.00
Oct purchases cash paid
$ (3,200.00)
Nov purchases cash paid
$ (1,000.00)
Nov Ending Balance
$ 4,000.00
Dec Credit purchases
$ 7,000.00
Nov purchases cash paid
$ (4,000.00)
Dec purchases cash paid
$ (1,400.00)
Dec 31, Ending Balance
$ 5,600.00
---The Dec 31 Ending Balance of $ 5,600 (Answer) can also be calculated as 80% of December purchases = 7000 x 80% = $ 5,600
| Oct | Nov | Dec | Total | |
| Total Sales | $ 7,000.00 | $ 9,000.00 | $ 12,000.00 | $ 28,000.00 |
| Cash Sale = 10% | $ 700.00 | $ 900.00 | $ 1,200.00 | $ 2,800.00 |
| Credit Sale = 90% | $ 6,300.00 | $ 8,100.00 | $ 10,800.00 | $ 25,200.00 |
| 40% of credit sale | $ 2,520.00 | $ 3,240.00 | $ 4,320.00 | $ 10,080.00 |
| 60% of credit sale | $ 3,780.00 | $ 4,860.00 | $ 6,480.00 | $ 15,120.00 |
