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PROBLEMS 7.1 The I. M. Broke Co. has the following collection pattern for its accounts receivable: 40 percent in the month of sale 50 percent in the month following the sale 8 percent in the second month following the sale 2 percent uncollectible The company has recent credit sales as follows: April: P200,000 May: 420,000 June: 350,000 Instruction: Determine the expected collections on its receivable for the month of June. 7.2 Barnes Company manufactures three products (A, B, and C) from three raw materials (X, Y, and Z). The following table indicates the number of pounds of each material that is required to manufacture each type of product: Product Material X Material Y Material Z A N NNN The company has a policy of maintaining an inventory of finished goods on all three products equal to 25 percent of the next month's budgeted sales. Listed below is the sales budget for the first quarter of 2006: Month Product A Product B Product C Jan 10,000 11,000 12,000 Feb. 9,000 12,000 8,000 Mar. 11,000 10,000 10,000 Instructions: 1. Assuming that the company meets its required inventory policy, prepare a production budget for the first 2 months of 2007 for each of the three products. 2. Assume further the following: Unit costs of materials X, Y, and Z are respectively P4 P3, and P5. The Barnes Company has a policy of maintaining its raw material inventories at 50 percent of the next month's production needs. Assuming that this policy is satisfied, prepare a material purchases budget for all three materials in both pounds and in peso for January.7.3 Shown below are the totals from 2018 period budgets. Revenue budget P100,000 Materials usage from production budget 15,000 Labor cost budget 20,000 Manufacturing overhead budget 20,000 General and administrative budget 30,000 Capital expenditure budget 20,000Work-in-Progress Inventories: Beginning of 2018 10,000 End of 2018 5,000 Finished Goods Inventory: Beginning of 2018 15,000 End of 2018 10,000 Tax Rate 40% Instructions: Prepare a forecasted Income Statement for the year. 7.4 The following are forecasts of sales and purchases for a company. Sales Purchases April P80,000 P30,000 May 90,000 40,000 June 85,000 30,000 All sales are on credit. Records show that 70 percent of the customers pay the month of the sale, 20 percent pay the month after the sale, and the remaining 10 percent pay the second month after the sale. Purchases are all paid the following month at a 2 percent discount. Cash disbursements for operating expenses in June were P5,000. Instructions: Prepare a schedule of cash receipts and disbursements for June.7.6 The following data were taken from the records of Jenny Company: Accounts receivable, May 31: (.3 x May sales of P500,000) = P150,000 Monthly forecasted sales: P400,000 June 440,000 July 500,000 August 530,000 September Sales consist of 70% cash and 30% credit. All credit accounts are collected in the month following the sales. Uncollectible accounts are negligible and may be ignored. Instructions: Prepare a sales budget schedule and a cash collections budget schedule for June, July and August. 7.7 Good Job Oil Company was preparing its sales budget for the first quarter of coming year. Forecasted sales are, in thousands: January P180,000 February 210,000 March 270,000 Sales are 20% cash and 80% on credit. Fifty percent (50%) of the credit accounts are collected in the month of sales, 40% in the month following the sale, and 10% in the following month. No uncollectible accounts are anticipated. Accounts receivable at the beginning of the coming year are P96 million (10% x November credit sales of P200 million and 50% of December credit sales of P152 million). Instructions: Prepare a schedule showing sales and cash collections for January, February, and March of the coming year. 7.8 Futura Company cash collections from customers has the following pattern: Collected within cash discount period in month of sale Collected within cash discount period in first month after month of sale 10 50% Collected after cash discount period in first month after month of sale Collected after cash discount period in second month after month of sale 12 25 Never collected Total sales in any month (before cash discounts) 3 Cash discount allowable as a percentage of invoice price 100% Instructions: 1% Compute the total cash budgeted to be collected in March if sales are predicted P300,000 for January, P400,000 for February, and P500,000 for March