company is preparing detailed budgets for the third quarter (Third quarter includes July, August and September) and fourth quarter (Fourth quarter includes October, November and December) and has assembled the following information to assist in the budget preparation (see b tables). Sales for June totaled $2,000. 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. Calculate the estimated quantity of wooden dining chairs that need to be produced in July. Estimated unit sales for the next several month Month Units July 100 August 200 September 300 October 200 November 200 300 December All sales are on account (i.e., on credit). These sales on account are usually collected in the following pattern: 65% 5% X 130 Correct Answer: 115 in the month following sale Uncollectible 4

company is preparing detailed budgets for the third quarter (Third quarter includes July, August and September) and fourth quarter (Fourth quarter includes October, November and December) and has assembled the following information to assist in the budget preparation (see b tables). Sales for June totaled $2,000. 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. Calculate the estimated quantity of wooden dining chairs that need to be produced in July. Estimated unit sales for the next several month Month Units July 100 August 200 September 300 October 200 November 200 300 December All sales are on account (i.e., on credit). These sales on account are usually collected in the following pattern: 65% 5% X 130 Correct Answer: 115 in the month following sale Uncollectible 4

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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Munoz Company is a retail company that specializes in selling outdoor camping equipment. The company is considering opening a new store on October 1, year 1. The company president formed a planning committee to prepare a master budget for the first three months of operation. As budget coordinator, you have been assigned the following tasks. Required a. October sales are estimated to be $340,000, of which 40 percent will be cash and 60 percent will be credit. The company expects sales to increase at the rate of 20 percent per month. Prepare a sales budget. b. The company expects to collect 100 percent of the accounts receivable generated by credit sales in the month following the sale. Prepare a schedule of cash receipts. c. The cost of goods sold is 70 percent of sales. The company desires to maintain a minimum ending inventory equal to 20 percent of the next month's cost of goods sold. However, ending inventory of December is expected to be $12,900. Assume that all purchases are made…
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Garden Sales, Incorporated, sells garden supplies. Management is planning its cash needs for the second quarter. The company usually has to borrow money during this quarter to support peak sales of lawn care equipment, which occur during May. The following information has been assembled to assist in preparing a cash budget for the quarter: a. Budgeted monthly absorption costing income statements for April-July are: Sales Cost of goods sold Gross margin Selling and administrative expenses: Selling expense Administrative expense* Total selling and administrative expenses Net operating income *Includes $17,000 of depreciation each month. April $ 550,000 385,000 165,000 75,000 42,500 117,500 $ 47,500 May $ 750,000 525,000 225.000 95,000 56,800 151,800 $ 73,200 June $ 450,000 315,000 135,000 56,000 35,000 91,000 $ 44,000 July $ 350,000 245,000 105,000 35,000 33,000 68,000 $ 37,000 b. Sales are 20% for cash and 80% on account. c. Sales on account are collected over a three-month period with…
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