The controller of Harrington Company estimates sales and production for the first four months of 2016 as
Question:
The controller of Harrington Company estimates sales and production for the first four months of 2016 as follows:
| January | February | March | april | |||||
| Sales | 33.000 $ | $43,300 | $53,200 | 24.000 $ | ||||
| Production in units | 1.050 | 1.560 | 2.180 | 2.620 |
60% of sales on credit are collected in the month of sale, 40% of the sales being cash and 60% on credit. 40% of sales on credit is collected in the month following the sale. It takes 4 kg of direct material to produce a finished unit, and the direct materials cost $5 per kg. All direct material purchases are in the account and are paid as follows: 40% in the month of purchase, 60% in the next month. The finished direct material stock for each month is 40% of the next month's production need.
January starting materials stock is 1,680 kg. Suppose both accounts receivable and accounts payable are zero at the beginning of January.
-What is the cash balance for the January–March period? (Round answer to 0 decimal places, eg 125.)
Expert Answer:
To calculate the cash balance for the JanuaryMarch period we need to calculate the cash inflows and outflows for each month and then add or subtract t... View the full answer
