Answered: Moorcroft Company's budgeted sales and…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter7: Budgeting

Section: Chapter Questions

Problem 12PB: Before the year began, the following static budget was developed for the estimated sales of 50,000....

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Moorcroft’s assistant controller suggested that Moorcroft hire a part time collector to encourage customers to pay more promptly and to reduce the amount of uncollectible accounts. Sales are still 40% cash and 60% credit but the assistant controller predicted that this would cause credit sales to be collected 30% in the month of the sale, 50% in the month following sale, and 18% in the second month following sale; 2% are uncollectible.

Prepare a schedule of expected collections from customers for June. How did these changes impact cash collections?

Moorcroft Company Schedule of Expected Collections from Customers
	Sales	April	May	June
April	$	$	$	$
May
June
Total Collections		$	$	$

Moorcroft Company's budgeted sales and direct materials purchases are as follows:
Budgeted Sales Budgeted D.M. Purchases
April
$299,000
$48,000
May
330,000
49,000
June
398,000
54,000

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Follow-up Question

Moorcroft's assistant controller suggested that Moorcroft hire a part time collector to encourage customers to pay more
promptly and to reduce the amount of uncollectible accounts. Sales are still 40% cash and 60% credit but the assistant controller
predicted that this would cause credit sales to be collected 30% in the month of the sale, 50% in the month following sale, and
18% in the second month following sale; 2% are uncollectible.
Prepare a schedule of expected collections from customers for June. How did these changes impact cash collections?
Moorcroft Company
Schedule of Expected Collections from Customers
Sales
April
May
June
$
173420
$
191400
$
i
86710
i
$
173420
299000
330000
398000
$
i
340500
$
230840
99000
32292
202932

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