lectronique Instruments, a rapidly expanding electronic parts distributor, is formulating its plans for 2012. John Kedrowski, the

Question:

Électronique Instruments, a rapidly expanding electronic parts distributor, is formulating its plans for 2012. John Kedrowski, the firm’s director of marketing, has completed his 2012 forecast and is confident that the company will meet or exceed sales estimates. The following sales figures show the growth that is expected and are the basis for planning in the other corporate departments:

Tae Hwan, assistant controller, is responsible for the cash flow projection, a critical element during a period of rapid expansion. She will use the following information in preparing her cash analysis:

1. Électronique has experienced an excellent record in accounts receivable collection and expects this trend to continue. The company collects 50% of billings in the month after the sale and 50% in the second month after the sale.

Uncollectible accounts are nominal and can be ignored in the analysis.

2. The purchase of electronic parts is Électronique’s largest expenditure; the cost of these items is equal to 60% of sales. Électronique receives 40% of the parts one month before it sells them and 60% during the month of sale.

3. Historically, Électronique has cleared 60% of the accounts payable one month after it receives its purchases, and the remaining 40% two months after.

4. Hourly wages, including fringe benefits, depend on the sales volume; they are equal to 20% of the current month’s sales. The company pays these wages in the month incurred.

5. General and administrative expenses are projected to be $ 2,750,000 for 2012. The composition of these expenses is given below. The company incurs all of these expenses uniformly throughout the year, except for property taxes. It pays the property taxes in four equal installments in the last month of each quarter:

Salaries ……………………….….. $ 490,000

Promotion ……………………….…. 670,000

Property taxes ………………….….. 250,000

Insurance ………………………….. 370,000

Utilities …………………………. 350,000

Depreciation ……………………. 620,000

………………………………..… $2,750,000

6. Électronique makes income tax payments in the first month of each quarter based on income for the prior quarter. The tax rate is 30%. The net income for the first quarter of 2012 is projected to be $750,000.

7. Électronique has a corporate policy of maintaining an end-of-month cash balance of $200,000. It invests or borrows cash monthly, as necessary, to maintain this balance.

8. Électronique uses a calendar-year reporting period.

Instructions

Prepare a schedule of Cash Receipts and Disbursements for Électronique Instruments, by month, for the second quarter of 2012. Be sure that all receipts, disbursements, borrowing, and investing amounts are presented on a monthly basis. Ignore the interest expense and income from borrowing and investing.

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...