Bombs Away Video Games Corporation has forecasted the following monthly sales: January $ 114,000 July $ 59,000 February 107,000 August 59,000 March 39,000 September 69,000 April 39,000 October 99,000 May 34,000 November 119,000 June 49,000 December 137,000 Total annual sales = $924,000 Bombs Away Video Games sells the popular Strafe and Capture video game. It sells for $5 per unit and costs $2 per unit to produce. A level production policy is followed. Each month's production is equal to annual sales (in units) divided by 12. Of each month's sales, 20 percent are for cash and 80 percent are on account. All accounts receivable are collected in the month after the sale is made. Construct a monthly production and inventory schedule in units. Beginning inventory in January is 39,000 units. Note: Input all your answers as positive numbers. Prepare a monthly schedule of cash receipts. Sales in December before the planning year are $100,000. Prepare a cash payments schedule for January through December. The production costs of $2 per unit are paid for in the month in which they occur. Other cash payments, besides those for production costs, are $59,000 per month. Prepare a monthly 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 $5,000, which is also the minimum desired. Note: Negative amounts should be indicated by a minus sign. Leave no cells blank be certain to enter '0' wherever required.

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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Bombs Away Video Games Corporation has forecasted the following monthly sales:

Total annual sales = $924,000
January	$ 114,000	July	$ 59,000
February	107,000	August	59,000
March	39,000	September	69,000
April	39,000	October	99,000
May	34,000	November	119,000
June	49,000	December	137,000

Bombs Away Video Games sells the popular Strafe and Capture video game. It sells for $5 per unit and costs $2 per unit to produce. A level production policy is followed. Each month's production is equal to annual sales (in units) divided by 12.

Of each month's sales, 20 percent are for cash and 80 percent are on account. All accounts receivable are collected in the month after the sale is made.

Construct a monthly production and inventory schedule in units. Beginning inventory in January is 39,000 units.
Note: Input all your answers as positive numbers.
Prepare a monthly schedule of cash receipts. Sales in December before the planning year are $100,000.
Prepare a cash payments schedule for January through December. The production costs of $2 per unit are paid for in the month in which they occur. Other cash payments, besides those for production costs, are $59,000 per month.
Prepare a monthly 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 $5,000, which is also the minimum desired.
Note: Negative amounts should be indicated by a minus sign. Leave no cells blank be certain to enter '0' wherever required.

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