Question
Galaxy Lighting Company manufactures and sells lighting fixtures. Estimated sales for the next three months are: September $350,000 October 500,000 November 400,000 Sales for August
Galaxy Lighting Company manufactures and sells lighting fixtures. Estimated sales for the next three months are:
September $350,000
October 500,000
November 400,000
Sales for August were $400,000. All sales are on account. Galaxy Lighting Company estimates that 60% of the accounts receivable are collected in the month of sale with the remaining 40% collected the following month. The units sell for $30 each. The cash balance for September 1 is $100,000.
Generally, 60% of purchases are due and payable in the month of purchase with the remainder due the following month. Purchase cost per unit for materials is $18. The company maintains an end-of-the-month inventory of 1,000 units plus 10% of next months unit sales.
Prepare a cash receipts schedule for September and October and a purchases budget for August, September, and October.
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