Budgeted Purchases and Cash Flows—MultipleChoice: D. Tomlinson Retail seeks your assistance to develop cash and other budget informa- tion for May. June, and July. At April 30, the company had cash of $5,500; accounts receivable of $437,000; inventories of $309,400; and accounts payable of $133.055. The budget is to be based on the following assumptions:

Sales: 

Each month's sales are billed on the last day of the month. Customers are allowed a 3 percent discount if payment is made within 1 days after the billing date. Receivables are recorded in the accounts at their gross amounts (not net of discounts). Sixty percent of the billings are collected within the discount period; 25 percent are collected by the end of the month; 9 percent are collected by the end of the second month; and 6 percent turn out to be uncollectible.

Purchases: 

Fifty-four percent of all purchases of material and selling, general, and administrative expenses are paid in the month purchased and the remainder in the following month. The number of units in each month's ending inventory is equal to 130 percent of the next month's units of sales. The cost of each unit of inventory is $20. Selling, general, and administrative expenses, of which $2,000 is depreciated, are equal to 1 5 percent of the current month's sales.

Actual and projected sales are as shown below;

Required:

Choose the best answer or indicate "none of the above."

a. Budgeted purchases in dollars for May are:

(1) $244,800. (2) $225,000. (3) $238,000. (4) $357,000.

b. Budgeted purchases in dollars for June are:

(1) $243,600. (2) $228,000. (3) $292,000. (4) $242,000.

c. Budgeted cash collections during the month of May are:

(1) $333,876. (2) $355,116. (3) $340,410. (4) $355,656.

d. Budgeted cash disbursements during the month of June are:

(1) $292,900. (2) $287,379. (3) $294,900. (4) $285,379.

e . The budgeted number of units of inventory to be purchased during July is:

(1) 15,860. (2) 12.260. (3) 12,000. (4) 15,600.

Transcribed Image Text:

Dollars Units March $354,000 11,800 April 363,000 12,100 May 357,000 11,900 June 342,000 11,400 July 360,000 12,000 August 366,000 12,200