The controller of Kari Company estimates sales and production for the first four months of 2016 as

Question:

The controller of Kari Company estimates sales and production for the first four months of 2016 as follows:

Sales are 60% cash and 40% on account, and 40% of credit sales are collected in the month of the sale. In the month after the sale, 60% of credit sales are collected. It takes 5 kg of direct material to produce a finished unit, and direct materials cost $6 per kg. All direct materials purchases are on account, and are paid as follows: 60% in the month of the purchase, 40% the following month. Ending direct materials inventory for each month is 20% of the next month's production needs. January's beginning materials inventory is 2,000 kg. Suppose that both accounts receivable and accounts payable are zero at the beginning of January.
Instructions
(a) What are the total cash sales for the January-March quarter?
(b) What is the accounts receivable balance at the end of March?
(c) What is the direct materials inventory balance at the end of March?
(d) What are material purchases costs for February?
(e) What are cash payments on account for February?
(f) What is the ending balance in accounts payable for March?
(g) What is the cash balance for the period January-March?

Accounts Payable
Accounts payable (AP) are bills to be paid as part of the normal course of business.This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive... Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...