Author Question: Sedona Gear Company, a rapidly growing distributor of camping equipment, is formulating its plans ... (Read 109 times)

jordangardner · **on:** Feb 5, 2023

Sedona Gear Company, a rapidly growing distributor of camping equipment, is formulating its plans for the coming year. Cody Mosbay, the firm's marketing director, has completed the following sales forecast.

Month	Sales	Month	Sales
January	$ 900,000	July	$1,900,000
February	1,000,000	August	1,900,000
March	900,000	September	1,600,000
April	1,200,000	October	1,600,000
May	1,500,000	November	1,800,000
June	1,900,000	December	2,000,000

Patti Bodkin, an accountant in the Planning and Budgeting Department, is responsible for preparing the cash flow projection. She has gathered the following information.

•	All sales are made on credit.

•	Sedona's excellent record in accounts receivable collection is expected to continue,

with 65 percent of billings collected in the month after sale and the remaining 35 percent collected in the second month after the sale.

•	Cost of goods sold, Sedona's largest expense, is estimated to equal 45 percent of sales

dollars. Seventy percent of inventory is purchased one month prior to sale and 30 percent during the month of sale. For example, in April, 30 percent of April cost of goods sold is purchased and 70 percent of May cost of goods sold is purchased.

•	All purchases are made on account. Historically, 70 percent of accounts payable have

been paid during the month of purchase, and the remaining 30 percent in the month following purchase.

Required:

a.	Prepare the cash receipts budget for the second quarter. Omit the heading.

b.	Prepare the purchases budget for the second quarter. Omit the heading.

c.	Prepare the cash payments budget for the second quarter. Omit the heading.

zubair1583 · **Reply #1 on:** Feb 5, 2023

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