Question
For the second quarter of the following year Cloaks Company has projected sales and production in units as follows: Jan Feb Mar Sales 49,000 51,000
For the second quarter of the following year Cloaks Company has projected sales and production in units as follows:
| Jan | Feb | Mar |
Sales | 49,000 | 51,000 | 56,000 |
Production | 53,000 | 48,000 | 49,000 |
Cash-related production costs are budgeted at $7 per unit produced. Of these production costs, 35% are paid in the month in which they are incurred and the balance in the next month. $95,000 per month will account for Selling and administrative expenses. On January 31 the accounts payable balance totals $185,000, which will be paid in Feb.
All units are sold on account for $13 each. Cash collections from sales are budgeted at 55% in the month of sale, 25% in the month following the month of sale, and the remaining 20% in the second month following the month of sale. On January 1 accounts receivable totaled $500,000 ($90,000 from Novembers sales and the remaining from January).
Required:
1) Prepare a schedule for each month showing budgeted cash disbursements for Cloaks Company.
2) Prepare a schedule for each month showing budgeted cash receipts for Cloaks Company.
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