A merchandising firm by the name of Star Wars Enterprises, had an inventory of 42,000 units on
Question:
A merchandising firm by the name of Star Wars Enterprises, had an inventory of 42,000 units on March 31, and it had accounts receivable totaling $83,500. Sales, in units, have been budgeted as follows for the next four months:
April | 55,000 |
May | 65,000 |
June | 81,000 |
July | 79,000 |
To be enforced in April, Star Wars board of directors has established a policy that states that the inventory at the end of each month should contain 35% of the units required for the following month's budgeted sales. $2.5 is the selling price per unit. One-Quarter of sales are paid for by customers in the month of the sale; the balance is collected in the following month.
Required:
1) Prepare a merchandise purchases budget showing how many units should be purchased for
each of the months April, May, and June.
2) Prepare a schedule of expected cash collections for each of the months April, May, and June.
Advanced Financial Accounting
ISBN: 978-0137030385
6th edition
Authors: Thomas Beechy, Umashanker Trivedi, Kenneth MacAulay