Carmen is a retailer of scrapbooking products. The sales forecast for the coming months is: Carmen's sales are 70% cash and 30% store credit. The credit sales are collected 60% in the month of sale, the remainder the following month. Accounts receivable on April 1 are $32,000.
Carmen's cost of sales averages 65% of revenues. The inventory policy is to carry 40% of next month's sales needs. April 1 inventory will be as expected under the policy. Carmen pays for purchases 30% in the month of purchase and 70% the following month. Accounts payable on April 1 is $125,000.
a. Prepare a purchases budget for as many months as is possible.
b. Prepare a cash payments budget for April through July.
c. Prepare a cash receipts budget for April through July.

Question

Carmen is a retailer of scrapbooking products. The sales forecast for the coming months is:  Carmen's sales are 70% cash and 30% store credit. The credit sales are collected 60% in the month of sale, the remainder the following month. Accounts receivable on April 1 are $32,000.
Carmen's cost of sales averages 65% of revenues. The inventory policy is to carry 40% of next month's sales needs. April 1 inventory will be as expected under the policy. Carmen pays for purchases 30% in the month of purchase and 70% the following month. Accounts payable on April 1 is $125,000.
a. Prepare a purchases budget for as many months as is possible.
b. Prepare a cash payments budget for April through July.
c. Prepare a cash receipts budget for April through July.

Quizplus · Accepted Answer

The Answer of Carmen is a retailer of scrapbooking products. The sales forecast for the coming months is:  Carmen's sales are 70% cash and 30% store credit. The credit sales are collected 60% in the month of sale, the remainder the following month. Accounts receivable on April 1 are $32,000.
Carmen's cost of sales averages 65% of revenues. The inventory policy is to carry 40% of next month's sales needs. April 1 inventory will be as expected under the policy. Carmen pays for purchases 30% in the month of purchase and 70% the following month. Accounts payable on April 1 is $125,000.
a. Prepare a purchases budget for as many months as is possible.
b. Prepare a cash payments budget for April through July.
c. Prepare a cash receipts budget for April through July.

Carmen Is a Retailer of Scrapbooking Products