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Milo Company manufactures beach umbrellas. The company is preparing detailed budgets for the third quarter and has assembled the following information to assist in the budget preparation: a. The Marketing Department has estimated sales as follows for the remainder of the year (in units): July August September 30,000 October 70,000 November 50,000 December The selling price of the beach umbrellas is $12 per unit. b. All sales are on account. Based on past experience, sales are collected in the following pattern: 30% in the month of sale 65% in the month following sale 5% uncollectible June 30 September 30 72,000 feet feet 20,000 10,000 Sales for June totaled $300,000. c. The company maintains finished goods inventories equal to 15% of the following month's sales. This requirement will be met at the end of June. d. Each beach umbrella requires 4 feet of Gilden, a material that is sometimes hard to acquire. Therefore, the company requires that the ending inventory of Gilden be equal to 50% of the following month's production needs. The inventory of Gilden on hand at the beginning and end of the quarter will be: ? 10,000 page 400 e. Gilden costs $0.80 per foot. One-half of a month's purchases of Gilden is paid for in the month of purchase; the remainder is paid for in the following month. The accounts payable on July 1 for purchases of Gilden during June will be $76,000.

Milo Company manufactures beach umbrellas. The company is preparing detailed budgets for the third quarter and has assembled the following information to assist in the budget preparation: a. The Marketing Department has estimated sales as follows for the remainder of the year (in units): July August September 30,000 October 70,000 November 50,000 December The selling price of the beach umbrellas is $12 per unit. b. All sales are on account. Based on past experience, sales are collected in the following pattern: 30% in the month of sale 65% in the month following sale 5% uncollectible June 30 September 30 72,000 feet feet 20,000 10,000 Sales for June totaled $300,000. c. The company maintains finished goods inventories equal to 15% of the following month's sales. This requirement will be met at the end of June. d. Each beach umbrella requires 4 feet of Gilden, a material that is sometimes hard to acquire. Therefore, the company requires that the ending inventory of Gilden be equal to 50% of the following month's production needs. The inventory of Gilden on hand at the beginning and end of the quarter will be: ? 10,000 page 400 e. Gilden costs $0.80 per foot. One-half of a month's purchases of Gilden is paid for in the month of purchase; the remainder is paid for in the following month. The accounts payable on July 1 for purchases of Gilden during June will be $76,000.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Milo Company manufactures beach umbrellas. The company is preparing detailed budgets for the third quarter and has assembled the following information to assist in the budget preparation: a. The Marketing Department has estimated sales as follows for the remainder of the year (in units): July August September 30,000 70,000 November 50,000 December The selling price of the beach umbrellas is $12 per unit. b. All sales are on account. Based on past experience, sales are collected in the following pattern: June 30 October 30% in the month of sale 65% in the month following sale 5% uncollectible September 30 Sales for June totaled $300,000. c. The company maintains finished goods inventories equal to 15% of the following month's sales. This requirement will be met at the end of June. d. Each beach umbrella requires 4 feet of Gilden, a material that is sometimes hard to acquire. Therefore, the company requires that the ending inventory of Gilden be equal to 50% of the following month's production needs. The inventory of Gilden on hand at the beginning and end of the quarter will be: 72,000 feet feet 20,000 10,000 10,000 ? page 400 e. Gilden costs $0.80 per foot. One-half of a month's purchases of Gilden is paid for in the month of purchase; the remainder is paid for in the following month. The accounts payable on July 1 for purchases of Gilden during June will be $76,000.
Transcribed Image Text:Milo Company manufactures beach umbrellas. The company is preparing detailed budgets for the third quarter and has assembled the following information to assist in the budget preparation: a. The Marketing Department has estimated sales as follows for the remainder of the year (in units): July August September 30,000 70,000 November 50,000 December The selling price of the beach umbrellas is $12 per unit. b. All sales are on account. Based on past experience, sales are collected in the following pattern: June 30 October 30% in the month of sale 65% in the month following sale 5% uncollectible September 30 Sales for June totaled $300,000. c. The company maintains finished goods inventories equal to 15% of the following month's sales. This requirement will be met at the end of June. d. Each beach umbrella requires 4 feet of Gilden, a material that is sometimes hard to acquire. Therefore, the company requires that the ending inventory of Gilden be equal to 50% of the following month's production needs. The inventory of Gilden on hand at the beginning and end of the quarter will be: 72,000 feet feet 20,000 10,000 10,000 ? page 400 e. Gilden costs $0.80 per foot. One-half of a month's purchases of Gilden is paid for in the month of purchase; the remainder is paid for in the following month. The accounts payable on July 1 for purchases of Gilden during June will be $76,000.
The company is in the process of preparing a budget for May and has assembled the following data: a. Sales are budgeted at $200,000 for May. Of these sales, $60,000 will be for cash; the remainder will be credit sales. One-half of a month's credit sales are collected in the month the sales are made, and the remainder is collected in the following month. All of the April 30 accounts receivable will be collected in May. b. Purchases of inventory are expected to total $120,000 during May. These purchases will all be on account. Forty percent of all purchases are paid for in the month of purchase; the remainder are paid in the following month. All of the April 30 accounts payable to suppliers will be paid during May. c. The May 31 inventory balance is budgeted at $40,000. d. Selling and administrative expenses for May are budgeted at $72,000, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $2,000 for the month. e. The note payable on the April 30 balance sheet will be paid during May, with $100 in interest. (All of the interest relates to May.) f. New refrigerating equipment costing $6,500 will be purchased for cash during May. g. During May, the company will borrow $20,000 from its bank by giving a new note payable to the bank for that amount. The new note will be due in one year. Required: 1. Calculate the expected cash collections from customers for May. 2. Calculate the expected cash disbursements for merchandise purchases for May. 3. Prepare a cash budget for May. 4. Using Schedule 9 as your guide, prepare a budgeted income statement for May. 5. Prepare a budgeted balance sheet as of May 31.
Transcribed Image Text:The company is in the process of preparing a budget for May and has assembled the following data: a. Sales are budgeted at $200,000 for May. Of these sales, $60,000 will be for cash; the remainder will be credit sales. One-half of a month's credit sales are collected in the month the sales are made, and the remainder is collected in the following month. All of the April 30 accounts receivable will be collected in May. b. Purchases of inventory are expected to total $120,000 during May. These purchases will all be on account. Forty percent of all purchases are paid for in the month of purchase; the remainder are paid in the following month. All of the April 30 accounts payable to suppliers will be paid during May. c. The May 31 inventory balance is budgeted at $40,000. d. Selling and administrative expenses for May are budgeted at $72,000, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $2,000 for the month. e. The note payable on the April 30 balance sheet will be paid during May, with $100 in interest. (All of the interest relates to May.) f. New refrigerating equipment costing $6,500 will be purchased for cash during May. g. During May, the company will borrow $20,000 from its bank by giving a new note payable to the bank for that amount. The new note will be due in one year. Required: 1. Calculate the expected cash collections from customers for May. 2. Calculate the expected cash disbursements for merchandise purchases for May. 3. Prepare a cash budget for May. 4. Using Schedule 9 as your guide, prepare a budgeted income statement for May. 5. Prepare a budgeted balance sheet as of May 31.
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X Search the web EXPERT SOLUTION FOLLOW-UP QUESTIONS ↓ Homework help starts here! ← Q&A Library Solution - 1. Budget- Sales (In Units) Selling Price Total Sales Credit Collections: In the Month of Sale In the Following Month Uncollectible Ending Finished Goods Inventory Beginning Finished Goods Inventory Production Each Unit Requires Ending Raw Material Inventory Beginning Raw Material Inventory Raw Material Purchases Cost per Foot Credit Payments: In the Month of Purchases In the Following Month 30% 65% 5% 15% 4 Feet 50% $ 0.80 June Working Notes July August September October November December 25,000 30,000 70,000 50,000 20,000 $ 12.00 $ 12.00 S 12.00 $ 12.00 $ 12.00 $ 840,000 $ 300,000 90,000 15,000 4,500 3,750 Milo Company manufactures beach umbrellas. The c... $360,000 108,000 195,000 18,000 10,500 4,500 252,000 180,000 234.000 42,000 7,500 10,500 $ 600,000 72,000 134,000 91,000 51,500 72,000 134,000 WAS THIS HELPFUL? 67,000 45,500 25,750 36,000 103,000 144,000 268,000 182,000 72,000 36,000 546,000 390,000 156,000 30,000 12,000 6,000 3,000 7,500 $ 240,000 37,000 91,000 1,500 3.000 18.500 74,000 20,000 37,000 123,500 206,000 225,000 128,000 57,000 $ 98,800 $164,800 $ 180,000 $ 102,400 $ 45,600 50% $ 49,400 $ 82,400 $ 90,000 $ 51,200 $ 22,800 50% 51,200 76,000 82,400 90,000 10,000 10,000 12.00 $ 12.00 120.000 $ 120,000 1,500 1,500 10,000 40,000 20,000 36,000 78,000 6,000 ASK AN EXPERT | 1.500 CHAT √ MATH SOLVER _from where ? O
Transcribed Image Text:X Search the web EXPERT SOLUTION FOLLOW-UP QUESTIONS ↓ Homework help starts here! ← Q&A Library Solution - 1. Budget- Sales (In Units) Selling Price Total Sales Credit Collections: In the Month of Sale In the Following Month Uncollectible Ending Finished Goods Inventory Beginning Finished Goods Inventory Production Each Unit Requires Ending Raw Material Inventory Beginning Raw Material Inventory Raw Material Purchases Cost per Foot Credit Payments: In the Month of Purchases In the Following Month 30% 65% 5% 15% 4 Feet 50% $ 0.80 June Working Notes July August September October November December 25,000 30,000 70,000 50,000 20,000 $ 12.00 $ 12.00 S 12.00 $ 12.00 $ 12.00 $ 840,000 $ 300,000 90,000 15,000 4,500 3,750 Milo Company manufactures beach umbrellas. The c... $360,000 108,000 195,000 18,000 10,500 4,500 252,000 180,000 234.000 42,000 7,500 10,500 $ 600,000 72,000 134,000 91,000 51,500 72,000 134,000 WAS THIS HELPFUL? 67,000 45,500 25,750 36,000 103,000 144,000 268,000 182,000 72,000 36,000 546,000 390,000 156,000 30,000 12,000 6,000 3,000 7,500 $ 240,000 37,000 91,000 1,500 3.000 18.500 74,000 20,000 37,000 123,500 206,000 225,000 128,000 57,000 $ 98,800 $164,800 $ 180,000 $ 102,400 $ 45,600 50% $ 49,400 $ 82,400 $ 90,000 $ 51,200 $ 22,800 50% 51,200 76,000 82,400 90,000 10,000 10,000 12.00 $ 12.00 120.000 $ 120,000 1,500 1,500 10,000 40,000 20,000 36,000 78,000 6,000 ASK AN EXPERT | 1.500 CHAT √ MATH SOLVER _from where ? O
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