42 The following information is from White Mountain Furnitur

42. The following information is from White Mountain Furniture Showrooms financial records Month Sales Purchases July $77,000 S51,000 August 66,000 56,000 September 71,000 44,000 October 87 000 62,000 Collections from customers are normally 65 percent in the month of sale, 19 percent in the month following the sale, and 14 percent in the second month follo the sale. The balance is expected to be ases are on account Management takes full advantage of the 2 percent discount wing allowed on purchases paid for by the tenth of the following month Purchases for November are budgeted 564,000, and sales for November are expected to be $16,000 for the month of November The company s cash balance on N S38,000 expenses are ovember 1 was Required 1. Prepare the schedule for expected cash collections during November WHITE MOUNTAIN FURNITURE SHOWROOM Expected Cash Collections November Expected Collections Month Sales Percent Total 2. Prepare the schedule for expected cash disbursements during November WHITE MOUNTAIN FURNITURE SHOWR Expected Cash Disbursement November Cctober purchases to be paid in November Net Cash disbursements for expenses Total

Solution

1. Schedule for expected cash collection

WHITE MOUNTAIN FURNITURE SHOWROOM

Expected Cash Collections

November

Month

Sales

Percent

Expected Collections

September

$71,000

14%

$9,940

October

$87,000

19%

$16,530

November

$70,000

65%

$45,500

Total

$71,970

2. Schedule for expected cash disbursements

White Mountain Furniture Showroom

Expected Cash Disbursements

November

October purchases to be paid in November

$62,000

Less : 2% Cash Discount

($1,240)

Net

$60,760

Cash disbursements for expenses

$16,000

Total

$76,760

3. Schedule for expected cash balance on November 30.

White Mountain Furniture Showroom

Expected Cash Balance

November 30

Balance, November 1

$38,000

Add : Expected Collections

$71,970

Less : Expected Disbursements

$76,760

Expected Balance

$33,210

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WHITE MOUNTAIN FURNITURE SHOWROOM Expected Cash Collections November
Month	Sales	Percent	Expected Collections
September	$71,000	14%	$9,940
October	$87,000	19%	$16,530
November	$70,000	65%	$45,500
Total			$71,970