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# Compute Budgeted Purchases, Cash Collections, Cash Disburse

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Delhi, Inc., seeks your assistance in developing cash and other budget information for August, September,
and October. At July 31, the company had cash of \$11,000, accounts receivable of \$892,000, inventories
of \$627,900, and accounts payable of \$188,669. The budget is to be based on the following assumptions.

? Each month's sales are billed on the last day of the month.
? Customers are allowed a 3 percent discount if payment is made within 10 days after the billing date.
Receivables are recorded in the accounts at their gross amounts (not net of discounts).
? The billings are collected as follows: 65 percent within the discount period, 20 percent by the end of
the month, and 9 percent by the end of the following month. Six percent is uncollectible.
Purchase data are as follows.
? Of all purchases of merchandise and selling, general, and administrative expenses, 52 percent is paid
in the month purchased and the remainder in the following month.
? The number of units in each month's ending inventory equals 130 percent of the next month's units of
sales.
? The cost of each unit of inventory is \$10.
? Selling, general, and administrative expenses, of which \$3,000 is depreciation, equal 20 percent of the
current month's sales.
? Actual and projected sales follow:

Dollars Units
June \$ 715,500 47,700
July 724,500 48,300
August 724,500 48,300
September 693,000 46,200
October 723,000 48,200
November 739,500 49,300

Required:

Budgeted purchases \$ 941850

Budgeted purchases \$ 724500

(c) Compute the Budgeted cash collections during August. (Round your intermediate calculations and
Budgeted cash collections \$

(d) Compute the Budgeted cash disbursements during September. (Round your intermediate
Budgeted cash disbursements \$

(e) Compute the budgeted number of units of inventory to be purchased during October.
Budgeted number of units 97500

#### Solution Preview

Your tutorial is in Excel (attached). Click in cells to see the ...

#### Solution Summary

Your tutorial is in Excel (attached). Click in cells to see the purchases budget, the collections budget, the disbursements budget and the amounts requested highlighted within these complete budget schedules.

\$2.19