Solid State sells electronic products. The controller is responsible for preparing the master budget and has accumulated
Question:
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 material 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:
Instructions
(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.
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =...
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Related Book For
Managerial Accounting Tools for Business Decision Making
ISBN: 978-1118856994
4th Canadian edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso, Ibrahim M. Aly
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