Question $7\mathrm{.}2($Total: $24$ marks$)$

Tiki Company has projected sales and production in units for the second quarter of the coming year as follows:

April May June

Sales $50,00040,00060,000$

Production $60,00050,00050,000$

Cash$-$related production costs are budgeted at $$5$ per unit produced. Of these production costs, $40\%$ are paid in the month in which they are incurred and the balance in the following month. Selling and administrative expenses will amount to $$100,000$ per month. The accounts payable balance on March $31$ totals $$190,000,$ which will be paid in April.

All units are sold on account for $$14$ each. Cash collections from sales are budgeted at $60\%$ in the month of sale, $30\%$ in the month following the month of sale, and the remaining $10\%$ in the second month following the month of sale. Accounts receivable on April $1$ totaled $$500,000($$$90,000$ from February's sales and the remainder from March$).$

Required:

$1.$ Prepare a schedule for each month showing budgeted cash disbursements for Tiki Company.

Tiki Company Budgeted Cash Disbursements

April May June Quarter

Production $60,00050,00050,000160,000$

Production cost price per unit $$5$ $$5$ $$5$ $$5$

Total production sales $$300,000$ $$250,000$ $$250,000$ $$800,000$

April May June Quarter

Account Receivable $3/31$ $$190,000$ $$190,000$

April Cash disbursements

$40\%$ x $$300,000$ $$120,000$ $$120,000$

$60\%$ x $$300,000$ $$180,000$ $$180,000$

May Cash disbursements

$40\%$ x $$250,000$ $$100,000$ $$100,000$

$60\%$ x $$250,000$ $$150,000$ $$150,000$

June Cash disbursements

$40\%$ x $$250,000$ $$100,000$ $$100,000$

Payment for Production Cost $$310,000$ $$280,000$ $$250,000$ $$840,000$

Selling and Admin Expenses $100,000100,000100,000$ $$300,000$

Total Cash disbursements $$410,000$ $$380,000$ $$350,000$ $$1,140,000$

$2.$ Prepare a schedule for each month showing budgeted cash receipts for Tiki Company.

Cash collections from sales of Tiki Company

April May June Quarter

Budgeted Sales in Units $50,00040,00060,000150,000$

Selling price per unit $$14$ $$14$ $$14$ $$14$

Total Budgeted sales $$700,000$ $$560,000$ $$840,000$ $$2,100,000$

Account Receivable $2/28$ $$90,000$ $$90,000$

Account Receivable $3/31($$$500,000-90,000]$ $$410,000$ $$410,000$

April Sales

$60\%$ x $$700,000$ $$420,000$ $$420,000$

$30\%$ x $$700,000$ $$210,000$ $$210,000$

$10\%$ x $$700,000$ $$70,000$ $$70,000$

May Sales

$60\%$ x $$560,000$ $$336,000$ $$336,000$

$30\%$ x $$560,000$ $$168,000$ $$168,000$

June Sales

$60\%$ x $$840,000$ $$504,000$ $$504,000$

Total sales collections $$920,000$ $$546,000$ $$742,000$ $$2,208,000$