Expected Cash Collections and Disbursements Schedules All sales at Bell Company are made on credit E

Expected Cash Collections and Disbursements Schedules All sales at Bell Company are made on credit Experience has
shown that 50% of the accounts receivable are collected in the month of the
sale, 48% are collected in the month following the sale, and the remaining 2%
are uncollectible Actual sales for May and budgeted sales for the following
four months are given below:

May (actual sales) $100,000

June $200,000

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July $400,000

August $500,000

September $300,000

The company’s cost of goods sold is equal to 60% of sales
All purchases of inventory are made on credit Bell Company pays for one half
of a month’s purchases in the month of purchase, and the other half in the
month following purchase The company requires that end-of-month inventories be
equal to 35% of the cost of goods sold for the next month

1 Compute
the amount of cash, in total, which the company can expect to collect in July

2 Compute
the budgeted dollar amount of inventory which the company should have on hand
at the end of June

3 Compute
the amount of inventory that the company should purchase during the months of
July and August

4 Compute
the amount of cash payments that will be made to suppliers during August for
purchases of inventory

 

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