Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Part I 55 marks The data below pertains to the third quarter of Ontario Company which manufactures toys. Below is the estimated sales (in units):

Part I 55 marks

The data below pertains to the third quarter of Ontario Company which manufactures toys.

Below is the estimated sales (in units):

July

30,000

August

60,000

September

80,000

October

40,000

November

10,000

December

20,000

  1. The selling price of the toys is $10 per unit.
  2. All sales are on account. Based on past experience, sales are collected in the following pattern:

Month of sale

25%

Month following sale

70%

Uncollectible

5%

  1. Sales for June totaled $400,000.
  2. The company maintains finished goods inventories equal to 20% of the following month's sales. This requirement will be met at the end of June.
  3. Each toy requires 3 pounds of raw materials.
  4. The company requires that the ending inventory of raw materials be equal to 20% of the following month's production needs.
  5. The raw material costs $1.50 per pound.
  6. 40% of a month's purchases of raw materials is paid for in the month of purchase; the remainder is paid for in the following month.
  1. The accounts payable on June 30 will be $80,000.

Required

  1. A schedule of expected cash collections (15 marks)
  2. A cash budget (20 marks)

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

Accounting and auditing research tools and strategies

Authors: Thomas Weirich, Thomas Pearson, Natalie Tatiana

8th edition

9781118806487, 1118027078, 1118806484, 978-1118027073

More Books

Students also viewed these Accounting questions

Question

What proactive strategies might you develop?

Answered: 1 week ago

Question

How does your message use verbal communication?

Answered: 1 week ago