Esquire Products Inc. expects the following monthly sales: January $ 44,000 July $ 38,000 February 35,000 August 42,000 March 28,000 September 45,000 April 30,000 October 50,000 May 24,000 November 58,000 June 22,000 December 40,000 Total sales = $456,000 Cash sales are 40 percent in a given month, with the remainder going into accounts receivable. All receivables are collected in the month following the sale. Esquire sells all of its goods for $2 each and produces them for $1 each. Esquire uses level production, and average monthly production is equal to annual production divided by 12.

a. Generate a monthly production and inventory schedule in units. Beginning inventory in January is 28,000 units.

b. Prepare a cash receipts schedule for January through December. Assume that dollar sales in the prior December were $20,000

SALE

CASH RECEIPTS

CASH SALES

PRIOR MONTH CREDIT SALES

TOTAL CASH RECEPTS

c. Prepare a cash payments schedule for January through December. The production costs ($1 per unit produced) are paid for in the month in which they occur. Other cash payments (besides those for production costs) are $9,000 per month.

PRODUCTION COST

OTHER CASH PAYMENT

TOTAL CASH PAYMENT

d. Construct a cash budget for January through December using the cash receipts schedule from part b and the cash payments schedule from part c. The beginning cash balance is $3,000, which is also the minimum desired.

BEGINNING CASH

NET CASH FLOW

CUMULATIVE CASH BALANCE

MONTLY LOAN OR (REPAYMENT)

ENDING CASH BALANCE

CUMULATIVE LOAN BALANCE

e. Determine total current assets for each month. Include cash, accounts receivable, and inventory. The accounts receivable for a given month is equal to 60 percent of that month's sales. Inventory is equal to ending inventory (part a) times the cost of $1 per unit.