Problem D: 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 and December is estimated as $420,000. All sales are on account. Galaxy Lighting Company estimates that 80% of the accounts receivables are collected in the month of sale with the remaining 20% collected the following month. The units sell for $40 each. 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 month's unit sales. August's ending inventory is estimated at 1,875 units and November's ending inventory is estimated as 2,500 units. The accounts payable balance on August 31 is expected to be $13,500 and should be paid in September. 1. Prepare a sales budget in dollars and units for September, October, and November. 2. Prepare a schedule of cash receipts from customers. 3. Prepare a purchases budget for September, October and November. 4. Prepare a schedule of cash payments for purchases. Problem D: Sales Budget, Schedules of Cash Receipts, Purchases Budget, and Cash Payments Oct Nov Galaxy Lighting Company Sales Budget Sept 8,750 $40 $ 350,000 Sales in units Sales price per unit (GIVEN) Sales Revenue the first month is done for you (calculate as Revenue / sales price) given 3 Galaxy Lighting Company Schedule of Cash Receipts Sept $ 350,000 Oct Nov the first month is done for you Sales revenue (from sales budget) Cash Collections from sales: 80% collected in month of sale 20% collected in month after sale Total Cash collections from sales 280,000 80,000 360,000 $ 3 3 Oct Nov the first month is done for you Galaxy Lighting Company Purchases Budget Sept 8,750 2,250 11,000 (1,875) 9,125 $18 $ 164,250 Sales in Units (from sales budget) Add: Desired Ending Inventory Total Needs Less: Beg. Inventory Purchases Required in units xpurchase cost per unit (GIVEN) Purchases Required in Dollars (1,000 units +10% of next mc Sept Beg inventory given from given Galaxy Lighting Company Schedule of Cash Payments for Purchases Sept Purchases (in dollars) (from purchases budget) $ 164,250 Oct Nov the first month is done for you from purchases budget Cash payments for purchases: Accounts payable, August 31 (GIVEN) 60% in month of purchase 40% in month after purchase Total cash payments for purchases 13,500 98,550 - $ $ 112,050