Part 2. Management of Tracy's Tack Supply provides the following information. (About 20 points)
December 31, 2023 account balances:
Cash $ 28,000
Accounts Rec 18,000
Merch Inventory 25,000
Accounts Pay 15,000
Salaries & Comm Pay 2,950
Budgeted amounts for 2024:
January February
Sales, all on account $ 101,000 $ 102,800
Purchases, all on account 50,600 51,500
Commissions Expense 5,050 5,140
Salaries Expense 5,500 5,500
Rent Expense 2,800 2,800
Depreciation Expense 900 900
Insurance Expense 400 400
Income Tax Expense 2,400 2,400
Requirements
1. Prepare the schedule of cash receipts from customers for January and February 2024. Assume
cash receipts are 80% in the month of sale and 20% in the month following the sale.
2. Prepare the schedule of cash payments for purchases for January and February 2024. Assume
purchases are paid 60% in the month of purchase and 40% in the month following purchase.
3. Prepare the schedule of cash payments for selling and administrative expenses for January and
February 2024. Assume 40% of the accrual of Salaries and Commissions Payable is for
Commissions and the other 60% is for Salaries. The December 31 balance will be paid in
January. Salaries and commissions for 2024 are paid 30% in the month incurred and 70% in the
following month. Rent and income tax expenses are paid as incurred. Insurance expense is an
expiration of the prepaid amount.
