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##### Computing budgeted cash payments for purchases

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Question;III. Computing budgeted cash payments for purchasesPowerdyne Company?s cost of goods sold is consistently 60% of sales. The company plans to carry ending merchandise inventory for each month equal to 40% of the next month?s budgeted cost of goods sold. All merchandise is purchased on credit, and 50% of the purchases made during a month is paid for in that month. Another 35% is paid for during the first month after purchase, and the remaining 15% is paid for during the second month after purchase.Expected dollar sales are:August (actual), \$150,000September (actual), \$350,000October (estimated), \$200,000November (estimated) \$300,000.Use this information to determine October?s expected cash payments for purchases.IV. Budgeted Cash ReceiptsEmily Company has sales on account and sales for cash. Specifically, 60% of its sales are on account and 40% are for cash. Credit sales are collected in full in the month following the sale. The company forecasts sales of \$525,000 for April, \$535,000 for May, and \$560,000 for June. The beginning balance of Accounts Receivable on April 1 is \$300,000.Prepare a schedule of budgeted cash receipts for April, May, and June.

Paper#41378 | Written in 18-Jul-2015

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