Question
For the second quarter of the following year Cloaks Company has projected sales and production in units as follows: Jan Feb Mar Sales 57,000 59,000
For the second quarter of the following year Cloaks Company has projected sales and production in units as follows:
Jan
Feb
Mar
Sales
57,000
59,000
64,000
Production
61,000
56,000
57,000
Cash-related production costs are budgeted at $8 per unit produced. Of these production costs, 40% are paid in the month in which they are incurred and the balance in the next month. $180,000 per month will account for Selling and administrative expenses. On January 31 the accounts payable balance totals $220,000, which will be paid in February.
All units are sold on account for $12 each. Cash collections from sales are budgeted at 60% in the month of sale, 20% 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 $642,000 ($110,000 from November's sales and the remaining from December).
Required:
1.Prepar a schedule for each month showing budgeted cash disbursements for Cloaks Company.(8 marks)
2.Prepar a schedule for each month showing budgeted cash receipts for Cloaks Company.
(8 marks)
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