Chapter 9 1) Jordan Company produces and sells basketballs. To guard against out of stock situations, the company requires that 20% of the next month's sales be on hand at the end of each month. Budgeted sales of basketballs over the next three months are: October November December Budgeted sales in units 80,000 120,000 100,000 Budgeted production for November would be: a. 140,000 units b. 124,000 units c. 116,000 units d. 100,000 units 2) The LaPann Company has obtained the following sales forecast data: July August September Cash Sales $80,000 $70,000 $50,000 Credit Sales $240,000 $220,000 $180,000 October $60,000 $200,000 The regular pattern of collection of credit sales is 30% in the month of sale and 70% in the month following the month of sale. There are no bad debts. The budgeted accounts receivable balance on September 30th is: a. $126,000 b. $154,000 c. $161,000 d. $186,000 3) Sander Co. has budgeted sales in units for the next four months as follows: July August September October 7,000 units 7,200 units 8,000 units 7,900 units Past experience has shown that the ending inventory for each month should be equal to 15% of the next month's sales in units. The company needs to prepare a production budget for the next four months. The beginning inventory for September should be: a. 1,080 units b. 1,200 units c. 1,185 units d. 1,170 units 4) Pauly Company's sales are collected 30% in the month of the sale, 40% in the month following sale, and 30% in the second month following sale. The following are budgeted sales data: January $62,000 February $72,000 March $52,000 April $32,000 Total Sales What are budgeted cash collections in March? a. $15,600 b. $66,000 c. $52,000 d. $63,000 5) Larry's Lumber sells lumber and general building supplies to building contractors. Larry's net income is budgeted to be $93,500 in December. There are no budgeted dividends to be paid. Statement of Financial Position November 30 Assets Cash Accounts receivable (net of allowance for uncollectible accounts) Inventory Property, plant and equipment (net of $495,000 accumulated depreciation) Total assets $19,900 84,700 101,907 972,000 $1,178,507 Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings Total liabilities and stockholders' equity $261,300 798,000 119.207 $1,178,507 The retained earnings at the end of December would be: a. $119,207 b. $25,707 c. ($48,593) d. $212,707