Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 51

Cash Receipts and Payments Information pertaining to Noskey Corporation’s sales revenue follows:

	November 2009 (Actual)	December 2009 (Budgeted)	January 2010 (Budgeted)
Cash sales	$ 80,000	$100,000	$ 60,000
Credit sales	240,000	360,000	180,000
Total sales	$320,000	$460,000	$240,000

Management estimates 5 percent of credit sales to be uncollectible. Of collectible credit sales, 60 percent is collected in the month of sale and the remainder in the month following the month of sale. Purchases of inventory each month include 70 percent of the next month’s projected total sales (stated at cost) plus 30% of projected sales for the current month (stated at cost). All inventory purchases are on account; 25 percent are paid in the month of purchase, and the remainder is paid in the month following the month of purchase. Purchase costs are approximately 60 percent of the selling price.

Required Determine for Noskey:

 Budgeted cash collections in December 2009 from November 2009 credit sales.

 Budgeted total cash receipts in January 2010.

 Budgeted total cash payments in December 2009 for inventory purchases.

Step 1 of 4

Cash disbursement is the cash payment made by the individual or the company is a specified period of time which could be week, month, year etc. These payments are made against the purchases made by firm or the operating expense which occur.