Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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 February.

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 November's sales and the remaining from December).

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.

A merchandising firm by the name of Star Wars Enterprises, had an inventory of 42,000 units on March 31, and it had accounts receivable totaling $83,500. Sales, in units, have been budgeted as follows for the next four months:

April

55,000

May

65,000

June

81,000

July

79,000

To be enforced in April, Star Wars board of directors has established a policy that states that the inventory at the end of each month should contain 35% of the units required for the following month's budgeted sales. $2.5 is the selling price per unit. One-Quarter of sales are paid for by customers in the month of the sale; the balance is collected in the following month.

Required:

1.Prepare a merchandise purchases budget showing how many units should be purchased for

each of the months April, May, and June.

2.Prepare a schedule of expected cash collections for each of the months April, May, and June.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Accounting

Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas

10th edition

1260481956, 1260310175, 978-1260481952

More Books

Students also viewed these Accounting questions

Question

Define self-discipline and cite its benefits.

Answered: 1 week ago

Question

r = 4% use 1=Prt Is 48 tis 6 month P is what Is (o monk 10

Answered: 1 week ago