Hicks Corporation seeks your assistance in developing cash and other budget information for August, September, and October At July 30, the company had cash of $5,500, accounts receivable of $437,000, inventories of $309,400, and accounts payable of $133,055 The budget is to be based on the followin...

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Hicks Corporation seeks your assistance in developing cash and other budget information for August, September, and October.

Question:

Hicks seeks your assistance in developing cash and other budget information for August, September, and October. At July 30, the company had cash of $5,500, of $437,000, inventories of $309,400, and of $133,055. The budget is to be based on the following assumptions:
Sales
_ Each month€™s sales are billed on the last day of the month.
_ Customers are allowed a 3 percent discount if payment is made within 10 days after the billing date. Receivables are recorded in the accounts at their gross amounts (not net of discounts).
_ The billings are collected as follows: 60 percent within the discount period, 25 percent by the end of the month, and 9 percent by the end of the second month. Six percent are uncollectable.
Purchases
_ Of all purchases of merchandise and selling, general, and administrative expenses, 54 percent is paid in the month purchased and the remainder in the following month.
_ The number of units in each month€™s equals 130 percent of the next month€™s units of sales.
_ The cost of each unit of inventory is $20.
_ Selling, general, and administrative expenses, of which $2,000 is depreciation, equal 15 percent of the current month€™s sales.
Actual and projected sales follow:

Hicks Corporation seeks your assistance in developing cash and o

Choose the best answer for each of the following.
a. Budgeted purchases in dollars for August are
(1) $357,000.
(2) $238,000.
(3) $225,000.
(4) $244,800.
(5) None of the above.
b. Budgeted purchases in dollars for September are
(1) $292,000.
(2) $243,600.
(3) $242,000.
(4) $228,000.
(5) None of the above.
c. Budgeted cash collections during August are
(1) $355,656.
(2) $355,116.
(3) $340,410.
(4) $333,876.
(5) None of the above.
d. Budgeted cash disbursements during September are
(1) $285,379.
(2) $287,379.
(3) $292,900.
(4) $294,900.
(5) None of the above.
e. The budgeted number of units of inventory to be purchased during October is
(1) 15,860.
(2) 15,600.
(3) 12,260.
(4) 12,000.
(5) None of theabove.

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