Sara is considering whether to open a gadgets shop. She provided you, as a consultant, the following information: Sales of $60,000 and $72,000 are expected for July and August, respectively. All goods are sold on account. The collection pattern for Accounts Receivable is 80 percent in the month of sale and 20 percent in the month following the sale. Purchases of $40,000 and $54,000 are expected for July and August. The payment pattern for purchases is 70 percent in the month of purchase, 30 percent in the month following the purchase. Other monthly expenses are $8,000, which includes $2000 of depreciation. All operating expenses are paid in the month of their incurrence. $2,000 of cash is available on August 1, 2021. Required: Prepare the cash collection budget for the two months ending August 31, 2021 Prepare the cash budget for the two months ending August 31, 2021

Sara is considering whether to open a gadgets shop. She provided you, as a consultant, the following information: Sales of $60,000 and $72,000 are expected for July and August, respectively. All goods are sold on account. The collection pattern for Accounts Receivable is 80 percent in the month of sale and 20 percent in the month following the sale. Purchases of $40,000 and $54,000 are expected for July and August. The payment pattern for purchases is 70 percent in the month of purchase, 30 percent in the month following the purchase. Other monthly expenses are $8,000, which includes $2000 of depreciation. All operating expenses are paid in the month of their incurrence. $2,000 of cash is available on August 1, 2021. Required: Prepare the cash collection budget for the two months ending August 31, 2021 Prepare the cash budget for the two months ending August 31, 2021

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter7: Budgeting

Section: Chapter Questions

Problem 14EA: Halifax Shoes has 30% of its sales in cash and the remainder on credit. Of the credit sales, 65% is...

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