Martin Clothing Company is a retail company that sells hiking and other outdoor gear specially...

Question:

Martin Clothing Company is a retail company that sells hiking and other outdoor gear specially made for the desert heat. It sells to individuals as well as local companies that coordinate adventure getaways in the desert for tourists. The following information is available for several months of the current year:

Month Sales Purchases Cash Expenses Paid
May $96,000 $70,000 $19,000
June 121,000 87,000 24,000
July 133,000 117,000 33,500
August 127,000 72,000 33,600

The majority of Martin's sales (65 percent) are cash, but a few of the excursion companies purchase on credit. Of the credit sales, 40 percent are collected in the month of sale and 60 percent are collected in the following month. All of Martin's purchases are on account with 55 percent paid in the month of purchase and 45 percent paid the following month.

Required:

1.Determine budgeted cash collections for July and August.

2. Determine budgeted cash payments for July and August.

Cash budget

Here we calculate cash collections and cash disbursements

Answer and Explanation: 1

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1. Cash collections

July cash collections = July cash sales + July credit sales collections + June credit sales collections

July cash collections =...

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Cash Budget: Definition & Examples

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Chapter 17 / Lesson 3
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See what cash budgets are, their purpose, and the importance of a cash budget in accounting. Learn how to prepare a cash budget and see cash budget examples.


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