value 3.60 points Problem 6-22 Level production and related financing effects [LO6-3] Esquire Products Inc. expects the following monthly sales $ 30,000 34,000 37,000 42,000 50,000 32,000 $ 36,000 July January February March April 27,000 August 20,000 September 22,000 October 16,000 November 14,000 December Total sales $360,000 June Cash sales are 40 percent in a given month, with the remainder going into accounts receivable. All receivables are collected in the month following the sale. Esquire sells all of its goods for $2 each and produces them for $1 each. Esquire uses level production, and average monthly production is equal to annual production divided by 12. a. Generate a monthly production and inventory schedule in units. Beginning inventory in January is 20,000 units Esquire Products Inc. Production and Inventory Schedule in Units Beginning Invento Ending Inventory Production- Sales 20,000 11,000 7,000 6.000 4,000 3,000 16,000 21,000 24,000 25,500 24,500 19,500 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 18,000 13,500 10,000 11.000 8,000 7,000 15,000 17,000 18,500 21,000 25,000 16,000 22,000 19,500 17,000 15,000 16,000 16,000 21,000 24,000 25,500 24,500 19,500 23,500 January February March April June Ul August September October November December b. Prepare a cash receipts schedule for January through December. Assume that dollar sales in the prior December were $20,000 Esquire Products Inc. Cash Receipts Schedule January February March April May June 27,000 S 20,000 S 22,000 14,000 Sales Cash receipts Cash sales Prior month's credit sales Total cash receipts 36,000$ 16,000$ 16,000 $ 16,000 32,000 $ 12,500 $ 18,000 30,500 $ 10,000 16,500 26,500 $ Esquire Products Inc. Cash Receipts Schedule September August October November December uI Sales Cash receipts Cash sales Prior month's credit sales Total cash receipts c. Prepare a cash payments schedule for January through December. The production costs ($1 per unit produced) are paid for in the month in which they occur. Other cash payments (besides those for production costs) are $8,200 per month Esquire Products Inc. Cash Payments Schedule Constant production January February March April May June Production cost Other cash payments Total cash payments Esquire Products Inc. Cash Payments Schedule Constant production July August September October November December Production cost Other cash payments Total cash payments d. Construct a cash budget for January through December using the cash receipts schedule from part b and the cash payments schedule from part c. The beginning cash balance is $3,000, which is also the minimum desired. (Negative amounts should be indicated by a minus sign.) Esquire Products Inc. Cash Budget January February March April May June Beginning cash Net cash flow Cumulative cash balance Monthly loan or (repayment) Ending cash balance Cumulative loan balance Esquire Products Inc. Cash Budget July August September October November December Beginning cash Net cash flow Cumulative cash balance Monthly loan or (repayment) Ending cash balance Cumulative loan balance e. Determine total current assets for each month. Include cash, accounts receivable, and inventory. The accounts receivable for a given month is equal to 60 percent of that month's sales. Inventory is equal to ending inventory (part a) times the cost of $1 per unit. Esquire Products Inc. Assets Accounts Receivable Total Current Assets Cash Inventory January February March April May June Ul August September October November December