Question 5 – This question has 1 part (8 marks)
8 marks
The owner of Tiger Trading Ltd. has approached you to help her to predict cash collections from customers in the month of June 2022. To assist your task, she has provided you with the following information:
Tiger Trading is a shirt wholesaler based in Lalor, VIC. Selling price per shirt is $10 (Ignore GST)
Monthly Budgeted Income Statement
| 30 April 2022 in $ | 31 May 2022 in $ | 30 June 2022 in $ | 30 July 2022 in $ | |
| Sales | 80,000 | 100,000 | 110,000 | 90,000 |
| LESS: Cost of Sales | (32,000) | (40,000) | (44,000) | (36,000) |
| GROSS PROFIT | 48,000 | 60,000 | 66,000 | 54,000 |
| LESS EXPENSES: | ||||
| Salaries/Wages | (10,000) | (10,000) | (10,000) | (10,000) |
| General Expenses | (15,000) | (17,500) | (20,000) | (18,000) |
| Depreciation | (3,000) | (3,000) | (3,000) | (3,000) |
| TOTAL EXPENSES | (28,000) | (30,500) | (33,000) | (31,000) |
| NET PROFIT | 20,000 | 29,500 | 33,000 | 23,000 |
ADDITIONAL INFORMATION:
Past history shows that 30% of sales are cash sales and 70% of sales are made on credit.
The basis for cash collections from credit customers are:
· 60% in the month of sale.
· 30% in the month following the sale.
· 10% in the second month following the sale.
Required:
Prepare a schedule of cash collections for the month of June 2022. (8 Marks)
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