The management accountant at Fuller Manufacturing Company, Dean Witter, is in the process of preparing the cash budget for the business for the quarter ending September 30, 2010. Extracts from the sales and purchases budgets are as follows: Cash Sales on Purchases on |Month Мay June Sales Account Account July August September $45,000 $60,000 $38,000 $47,000 $51,000 $480,000 $600,000 $720,000 $640,000 $800,000 $390,000 $360,000 $450,000 $400,000 $500,000 i) An analysis of the records shows that trade receivables (accounts receivable) are settled according to the following credit pattern, in accordance with the credit terms 5/30, n90: 60% in the month of sale 20% in the first month following the sale 15% in the second month following the sale The remaining 5% is expected to be uncollectible. ii) Accounts payable are settled as follows: 70% in the month in which the inventory is purchased 30% in the following month The credit terms of the suppliers - 10/30, ná0.
The management accountant at Fuller Manufacturing Company, Dean Witter, is in the process of preparing the cash budget for the business for the quarter ending September 30, 2010. Extracts from the sales and purchases budgets are as follows: Cash Sales on Purchases on |Month Мay June Sales Account Account July August September $45,000 $60,000 $38,000 $47,000 $51,000 $480,000 $600,000 $720,000 $640,000 $800,000 $390,000 $360,000 $450,000 $400,000 $500,000 i) An analysis of the records shows that trade receivables (accounts receivable) are settled according to the following credit pattern, in accordance with the credit terms 5/30, n90: 60% in the month of sale 20% in the first month following the sale 15% in the second month following the sale The remaining 5% is expected to be uncollectible. ii) Accounts payable are settled as follows: 70% in the month in which the inventory is purchased 30% in the following month The credit terms of the suppliers - 10/30, ná0.
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter9: Profit Planning And Flexible Budgets
Section: Chapter Questions
Problem 45BEB: Pilsner Inc. purchases raw materials on account for use in production. The direct materials...
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Concept explainers
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
Required:
(a) Prepare a schedule of budgeted cash collections for sales for each of the
months July to September.
(b) Prepare a schedule of expected cash disbursements for purchases for the
quarter to September 30, 2010.
Transcribed Image Text:The management accountant at Fuller Manufacturing Company, Dean Witter, is in
the process of preparing the cash budget for the business for the quarter ending
September 30, 2010. Extracts from the sales and purchases budgets are as follows:
Cash
Sales on
Purchases on
Month
Sales
$45,000
$60,000
$38,000
$47,000
$51,000
Account
Аccount
$390,000
$360,000
$450,000
$400,000
$500,000
May
June
$480,000
$600,000
July
|August
|September
$720,000
$640,000
$800,000
i) An analysis of the records shows that trade receivables (accounts receivable) are
settled according to the following credit pattern, in accordance with the credit
terms 5/30, n90:
60% in the month of sale
20% in the first month following the sale
15% in the second month following the sale
The remaining 5% is expected to be uncollectible.
ii) Accounts payable are settled as follows:
70% in the month in which the inventory is purchased
30% in the following month
The credit terms of the suppliers - 10/30, n60.
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