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Capp Corporation is a producer of industrial goods. Data regarding operations follow: Data for Sales and Cash Collections: Sales are budgeted at $175,000 for
Capp Corporation is a producer of industrial goods. Data regarding operations follow: Data for Sales and Cash Collections: Sales are budgeted at $175,000 for October, $180,000 for November, $170,000 for December, and $190,000 for January. The average selling price is $50 per unit. Collections are expected to be 60% in the month of sale, 35% in the month following the sale, and 5% uncollectible. The October beginning balance in the accounts receivable account is $60,000. All of it will be collected in October. Additional Data for Production and Raw Materials: (Note use the sales information above and the following data). The company desires an ending merchandise inventory (finished goods) equal to 20% of the following month's sales. The beginning merchandise balance (finished goods) is 1,100 units. It takes 4 items of materials per each finished unit. Each item of raw materials average cost is $10. The company desires an ending raw materials equal to 10% of the following month's required production needs. The beginning raw materials balance is 4,000 units. Additional Data for Expected Cash Payments: . 40% of the merchandise is paid for in the month of purchase, with the remaining 60% paid in the month following the purchase. The October beginning balance in the accounts payable account is $55,000. All of it will be paid in October. Required: a. Prepare a Schedule of Expected Collections for October, November, and December. b. Prepare a Production Schedule for October, November, December and the fourth quarter.
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a Schedule of Expected Collections October Sales 175000 Collections 60 in the month of sale 175000 60 105000 35 in the month following the sale 180000 ...Get Instant Access to Expert-Tailored Solutions
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