Big Foot Shoe Company sells two kinds of boots: hiking and ski. Its hiking boots sell for
Question:
Big Foot Shoe Company sells two kinds of boots: hiking and ski. Its hiking boots sell for $100 and cost $60 per pair. Its ski boots sell for $150 and cost
$75 per pair. Big Foot also has provided the following data: • In 20X2, the company expects to sell 48,000 pairs of hiking boots and 23,000 pairs of ski boots. The company has 4,000 pairs of hiking boots and 2,000 pairs of ski boots on hand at the beginning of the year. They want to hold 10 percent of the annual sales of each product in inventory for the following year.
• They expect to collect 90 percent of sales in cash each year and the remaining 10 percent as credit sales. Eighty percent of credit sales are collected in the current year and 20 percent are collected in the following year. Accounts receivable at the beginning of the year was $9,000, all of which will be collected in 20X2.
• Big Foot Shoe Company pays for 80 percent of its purchases in the current year and the remaining 20 percent in the next fiscal year. Accounts payable at the beginning of the year were $12,000, all of which will be paid in 20X2.
• Cash on hand at the beginning of the year was $50,000. Based on these data, prepare the following:
a. Sales forecast for 20X2.
b. Estimated contribution margin for 20X2.
c. Cash receipts schedule for 20X2.
d. Cash payments schedule for 20X2.
e. Current assets section of the balance sheet at December 31, 20X2.
Accounting concepts and applications
ISBN: 978-0538745482
11th Edition
Authors: Albrecht Stice, Stice Swain