Abeng Corp, a rapidly-expanding crossbow distributor, is in the process of formulating plans for James Chambers, director of marketing, has completed his 2021 forecast and is confident that sales estimates will be met or exceeded. The following forecasted sales figures show the growth expected and will provide the planning basis for other corporate departments: Month Sales (units) Month Sales (units) January 7,200 July 12,000 February 8,000 August 11,000 March 7,200 September 12,800 April 8,800 October 13,600 May 10,000 November 12,000 June 11,200 December 14,000 Ellen Eglin, assistant controller, has been given responsibility for formulating the cash flow projections, a critical element during a period of rapid expansion. The following information will be used in preparing the cash analysis: Bows are sold at an average price of $150. Abeng has experienced an excellent record in accounts receivable collection and expects this trend to The company collects 30% of its billings in the month of sales, 50% in the first month following sale and the balance in the second month after sale. The purchase of crossbows is Abeng’s largest expenditure; the cost of these items is 55% of The company maintains an ending inventory equal to 60% of the next month’s requirements. Prior experience shows that 75% of accounts payable is paid by Abeng 1 month after purchase and 25% in the second month after Wages, including fringe benefits, are a function of sales volume and are equal to 15% of the current month’s Administrative expenses are projected to be $2,640,000 for All of these expenses are incurred uniformly throughout the year except for the property taxes. Property taxes are paid in four equal installments in the last month of each quarter. The composition of the expenses is: Salaries $480,000 Promotion $660,000 Property taxes $240,000 Insurance $360,000 Utilities $300,000 Depreciation $600,000 $2,640,000 A dividend of $150,000 will be paid in In August, the company plans an issue of common stock, which is expected to raise $350,000. Equipment with an original cost of $600,000 will be disposed of in September for $250,000. New equipment will be purchased in that month at a cost of $800,000. Payment will be made in two equal installments, in June and Income tax payments are made by Abeng in the first month of each quarter based on income for the prior quarter. The income tax rate is 35% and the firm’s net income for the second quarter of 2021 is projected to be $612,000. Abeng has a corporate policy of maintaining a minimum end-of month cash balance of $150,000. The company maintains a line of credit to maintain this balance. Borrowings are made at the beginning of the month and interest (7%) is paid at the end of the month. Required: Prepare the following for the third quarter of the year: Schedule of cash collections Purchases budget

Abeng Corp, a rapidly-expanding crossbow distributor, is in the process of formulating plans for James Chambers, director of marketing, has completed his 2021 forecast and is confident that sales estimates will be met or exceeded. The following forecasted sales figures show the growth expected and will provide the planning basis for other corporate departments: Month Sales (units) Month Sales (units) January 7,200 July 12,000 February 8,000 August 11,000 March 7,200 September 12,800 April 8,800 October 13,600 May 10,000 November 12,000 June 11,200 December 14,000 Ellen Eglin, assistant controller, has been given responsibility for formulating the cash flow projections, a critical element during a period of rapid expansion. The following information will be used in preparing the cash analysis: Bows are sold at an average price of $150. Abeng has experienced an excellent record in accounts receivable collection and expects this trend to The company collects 30% of its billings in the month of sales, 50% in the first month following sale and the balance in the second month after sale. The purchase of crossbows is Abeng’s largest expenditure; the cost of these items is 55% of The company maintains an ending inventory equal to 60% of the next month’s requirements. Prior experience shows that 75% of accounts payable is paid by Abeng 1 month after purchase and 25% in the second month after Wages, including fringe benefits, are a function of sales volume and are equal to 15% of the current month’s Administrative expenses are projected to be $2,640,000 for All of these expenses are incurred uniformly throughout the year except for the property taxes. Property taxes are paid in four equal installments in the last month of each quarter. The composition of the expenses is: Salaries $480,000 Promotion $660,000 Property taxes $240,000 Insurance $360,000 Utilities $300,000 Depreciation $600,000 $2,640,000 A dividend of $150,000 will be paid in In August, the company plans an issue of common stock, which is expected to raise $350,000. Equipment with an original cost of $600,000 will be disposed of in September for $250,000. New equipment will be purchased in that month at a cost of $800,000. Payment will be made in two equal installments, in June and Income tax payments are made by Abeng in the first month of each quarter based on income for the prior quarter. The income tax rate is 35% and the firm’s net income for the second quarter of 2021 is projected to be $612,000. Abeng has a corporate policy of maintaining a minimum end-of month cash balance of $150,000. The company maintains a line of credit to maintain this balance. Borrowings are made at the beginning of the month and interest (7%) is paid at the end of the month. Required: Prepare the following for the third quarter of the year: Schedule of cash collections Purchases budget

FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Abeng Corp, a rapidly-expanding crossbow distributor, is in the process of formulating plans for James Chambers, director of marketing, has completed his 2021 forecast and is confident that sales estimates will be met or exceeded. The following forecasted sales figures show the growth expected and will provide the planning basis for other corporate departments:

Month	Sales (units)	Month	Sales (units)
January	7,200	July	12,000
February	8,000	August	11,000
March	7,200	September	12,800
April	8,800	October	13,600
May	10,000	November	12,000
June	11,200	December	14,000

Ellen Eglin, assistant controller, has been given responsibility for formulating the cash flow

projections, a critical element during a period of rapid expansion. The following information will be used in preparing the cash analysis:

Bows are sold at an average price of $150.
Abeng has experienced an excellent record in accounts receivable collection and expects this trend to The company collects 30% of its billings in the month of sales, 50% in the first month following sale and the balance in the second month after sale.
The purchase of crossbows is Abeng’s largest expenditure; the cost of these items is 55% of The company maintains an ending inventory equal to 60% of the next month’s

requirements.

Prior experience shows that 75% of accounts payable is paid by Abeng 1 month after purchase and 25% in the second month after
Wages, including fringe benefits, are a function of sales volume and are equal to 15% of the current month’s

Administrative expenses are projected to be $2,640,000 for All of these expenses are incurred uniformly throughout the year except for the property taxes. Property taxes are paid in four equal installments in the last month of each quarter. The composition of the expenses is:

Salaries	$480,000
Promotion	$660,000
Property taxes	$240,000
Insurance	$360,000
Utilities	$300,000
Depreciation	$600,000
	$2,640,000

A dividend of $150,000 will be paid in
In August, the company plans an issue of common stock, which is expected to raise

$350,000.

Equipment with an original cost of $600,000 will be disposed of in September for $250,000. New equipment will be purchased in that month at a cost of $800,000. Payment will be made in two equal installments, in June and
Income tax payments are made by Abeng in the first month of each quarter based on

income for the prior quarter. The income tax rate is 35% and the firm’s net income for the second quarter of 2021 is projected to be $612,000.

Abeng has a corporate policy of maintaining a minimum end-of month cash balance of

$150,000. The company maintains a line of credit to maintain this balance. Borrowings are made at the beginning of the month and interest (7%) is paid at the end of the month.

Required:

Prepare the following for the third quarter of the year:

Schedule of cash collections
Purchases budget

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