Bernard Creighton is the controller for Creighton Hardware Store. INputting together the cash budget for thr fourth quarter of the year, he has assembled the following data.
- July (actual) $100,000
- August (actual) $120,000
- September (estimated) $90,000
- October (estimated) $100,000
- November (estimated) $135,000
- December (estimated) $150,000
b. Each month, 20 percent of sales are foe cash, and 80 percent are on credit. The colection pattern for credit sales is 20 percent in the month of sale, 50 percent in the following month, and 30 percent in the second month following the sale.
c. Each month, the ending inventory exactly equals 40 percent of the cost of the next month's sales. The markup on goods is 33.33 percent of cost.
d. Inventory purchases are paid for in the month following purchase.