Answer:
Results are below.
Explanation:
Giving the following information:
Budgeted Sales - Budgeted D.M. Purchases
January= $300,000 - $60,000
February= $330,000 - $70,000
March= $350,000 - $80,000
Hagen’s sales are 40% cash and 60% credit. Credit sales are collected 10% in the month of sale, 50% in the month following sale, and 36% in the second month following sale; 4% are uncollectible.
Hagen’s purchases are 50% cash and 50% on account. Purchases on account are paid 40% in the month of purchase, and 60% in the month following purchase.
A) We need to determine the cash collections from sales for March:
Cash collection:
Sales in cash= 350,000*0.4= 140,000
Sales on account From March= (350,000*0.6)*0.1= 21,000
Sales on account From February= (330,000*0.6)*0.5= 99,000
Sales on account From January= (300,000*0.6)*0.36= 64,800
Total cash= $324,800
B) We need to determine the cash payments in March:
Cash payment:
Purchase in cash= 80,000*0.5= 40,000
Purchase on account from March= (80,000*0.5)*0.4= 16,000
Purchase on account from February= (70,000*0.5)*0.6= 21,000
Total cash payment= $77,000
