29 Jun Question The Doley Company has planned
Question
The Doley Company has planned the following sales for the next three months:
January
February
March
Budgeted Sales
$40,000
$50,000
$70,000
Sales are made 20% for cash and 80% on account. From experience, the company has learned that a month’s sales on account are collected according to the following pattern:
Month of sale
60%
First month following sale
30%
Second month following sale
8%
Uncollectible
2%
The company requires a minimum cash balance of $5,000 to start a month. The beginning cash balance in March is budgeted to be $6,000.
Required
a) Compute the budgeted cash receipts for March. Rember to think in terms of when actual cash is planned to be received. If you are not going to receive the cash it is not part of the budget. Also pay close attention to cash vs credit sales
b) The following additional information has been provided for March:
Inventory purchases (all paid in cash in March)
$28,000
Operating Expenses (all paid in cash in March)
$40,000
Depreciation expense for March
$5,000
Dividends paid in March
$4,000
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