Download Month Sales Purchases April $72,000 $42,000 May 66,000 48,000

Exercise 9‐27
Month
Sales
Purchases
April
$72,000
$42,000
May
66,000
48,000
June
60,000
36,000
J l
July
78 000
78,000
54 000
54,000
Collections from customers are normally 70% in the month of sale, 20% in the month following the sale and 9% in the second month following the sale. The balance is expected to be uncollectible.
All purchases are on account
Management plans to take full advantage of 2% discount allowed on purchases paid for by the 10th of the following month
Budgeted August purchases are $60,000; Forecasted August sales are $66,000
Expected August disbursements for expenses are $14,400; August 1 cash balance is $22,000
©Dr. Chula King
All Rights Reserved
Exercise 9‐27 (continued)
Part 1: Prepare a schedule of expected cash collections for August
Binghamton Film Corporation
Expected Cash Collections
For the Month of August
Month
Sales
Percent
Expected Collections
June
$60,000
9%
$ 5,400
July
78,000
20%
15,600
August
66,000
70%
46,200
Total expected cash collections
$67,200
©Dr. Chula King
All Rights Reserved
Exercise 9‐27 (continued)
Part 2: Prepare a schedule of expected cash disbursements for August
Binghamton Film Corporation
Expected Cash Disbursements
For the Month of August
July purchases (to be paid in August)
$54,000
Less: 2% cash discount
(1,080)
Cash disbursements for purchases
$52,920
Cash disbursements for expenses
14,400
Total expected cash disbursements
$67,320
©Dr. Chula King
All Rights Reserved
Exercise 9‐27 (continued)
Part 3: Prepare a schedule of expected cash balance on August 31
Binghamton Film Corporation
Expected Cash Balance
August 31
Cash balance, August 1
$22,000
Add: Expected cash collections
67,200
Deduct: Expected cash disbursements
(67,320)
Expected cash balance
$21,880
©Dr. Chula King
All Rights Reserved