Allan Corporation has a sales budget for March of $440,000. About 10% are cash sales...
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Accounting
Allan Corporation has a sales budget for March of $440,000. About 10% are cash
sales and the remainder is sold on account.
The company expects that 60% of credit sales will be collected in the month of the
sale, 25% in the next month and 10% in the following month.
Materials purchased on account are expected to be $250,000. Allan pays 35% in the
month of the purchase, 50% in the month following the purchase and the remaining
15% in the second month after the purchase.
Salaries and wages of the workers are approximately $45,000 per
month. The employees are paid weekly so on average 95% of their wages are paid in the month to which they relate and the remaining 5% is paid in the following month.
Utilities average $4,300 per month.
Rent on the building is $9,000 per month.
Insurance is $3,000 per month and advertising costs are $1,000
per month.
February sales were $320,000 and purchases of materials in February were $170,000;
January sales were $200,000 and purchases of materials in January were $130,000.
The cash balance on March 1st is $5,400.
1.Prepare a schedule of cash collections on accounts receivable for March.
2.Prepare a schedule of cash disbursements on accounts payable for March.
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