Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Tesla sells portable voltage tester. Tesla's finance manager is required to prepare the master budget and accumulated the information below for the months of January,

Tesla sells portable voltage tester. Tesla's finance manager is required to prepare the master

budget and accumulated the information below for the months of January, February, and March.

Balances on January 1 are expected to be as follows:

Cash $5,500 Inventories $309,400

Accounts receivable 416,100 Accounts payable 133,055

The budget is to be based on the following assumptions:

1.

Each month's sales are billed on the last day of the month.

2.

Customers are allowed a 3% discount if their payment is made within 10 days after the

billing date. Receivables are booked at gross.

3.

The company collects 60% of the billings within the discount period, 25% by the end of the

month after the date of sale, and 9% by the end of the second month after the date of sale;

6% prove uncollectible.

4.

It pays 54% of all materials purchases and the selling, general, and administrative

expenses in the month purchased and the remainder in the following month. Each month's

units of ending inventory are equal to 130% of the next month's units of sales.

5.

The cost of each unit of inventory is $20.

6.

Selling, general, and administrative expenses, of which $2,000 is for depreciation, are

equal to 15% of the current month's sales.

7.

Actual and projected sales are as follows:

Month Sales Units

November $354,000 11,800

December 363,000 12,100

January 357,000 11,900

February 342,000 11,400

March 360,000 12,000

April 366,000 12,200

Required:

A. Calculate the budgeted cash disbursements during the month of February.

B. Calculate the budgeted cash collections during the month of January.

C. Calculate the budgeted number of units of inventory to be purchased during the

month of March.

D. What does this information communicate to the Finance Manager?

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

Intermediate Accounting

Authors: J. David Spiceland, James Sepe, Lawrence A. Tomassini

4th Edition

0072994029, 9780072994025

More Books

Students also viewed these Accounting questions

Question

CL I P COL Astro- L(1-cas0) Lsing *A=2 L sin(0/2)

Answered: 1 week ago