At March 31 MCA Enterprises, a merchandising firm, had an inventory of 27,000 units, and it had accounts receivable totaling $85,000 (the entire amount will be collected in April) Sales, in units, have been budgeted as follows for the next three months April 90,000 May 75,000 June 80,000 The companys board of directors has established a policy that the inventory at the end of each month should contain 30 of the units required for the following month's budgeted sales The selling price is $5 per unit 40 of sales are paid for by customers in the month of the sale, 50 in the month following the sales and the balance is considered uncollectable Required Prepare a merchandise purchases budget showing how many units should be purchased for each of the months April and May 2 marks Prepare a schedule of expected cash collections for each of the months April and May 3 marks For April, MCA had an opening cash balance of $6,000 Purchased inventory cost $2 00 per unit and is paid in full in the month of purchase Other costs for the month of April include advertising of $12,000, rent of $6,000, depreciation of $14,000, and general management cost of $19,000 The company decided starting this month they need to have a cash minimum of $50,000 Prepare a cash budget for April and determine how much they will need to borrow or if they have excess cash 5 marks

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At March 31 MCA Enterprises, a merchandising firm, had an inventory of 27,000 units, and it had accounts receivable totaling $85,000 (the entire amount will

At March 31 MCA Enterprises, a merchandising firm, had an inventory of 27,000 units, and it had accounts receivable totaling $85,000 (the entire amount will be collected in April). Sales, in units, have been budgeted as follows for the next three months:

April 90,000

May 75,000

June 80,000

The companys board of directors has established a policy that the inventory at the end of each month should contain 30% of the units required for the following month's budgeted sales.

The selling price is $5 per unit. 40% of sales are paid for by customers in the month of the sale, 50% in the month following the sales and the balance is considered uncollectable

Required:

Prepare a merchandise purchases budget showing how many units should be purchased for each of the months April and May. [2 marks]

Prepare a schedule of expected cash collections for each of the months April and May. [3 marks]

For April, MCA had an opening cash balance of $6,000. Purchased inventory cost $2.00 per unit and is paid in full in the month of purchase. Other costs for the month of April include advertising of $12,000, rent of $6,000, depreciation of $14,000, and general management cost of $19,000. The company decided starting this month they need to have a cash minimum of $50,000. Prepare a cash budget for April and determine how much they will need to borrow or if they have excess cash? [5 marks]