Millen’s managers have made the following additional assumptions and estimates:Estimated sales for July and August are $310,000 and $330,000, respectively.Each month’s sales are 20% cash sales and 80% credit sales. Each month’s credit sales are collected 30% in the month of sale and 70% in the month following the sale. All of the accounts receivable at June 30 will be collected in July.Each month’s ending inventory must equal 20% of the cost of next month’s sales. The cost of goods sold is 60% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts payable at June 30 will be paid in July.Monthly selling and administrative expenses are always $70,000. Each month $10,000 of this total amount is depreciation expense and the remaining $60,000 relates to expenses that are paid in the month they are incurred.The company does not plan to buy or sell any plant and equipment during July. It will not borrow any money, pay a dividend, issue any common stock, or repurchase any of its own common stock during July.STUCK ON (Calculate the estimated operating cycle for the month of July. (Hint: Use 30 days in the numerator to calculate the average collection period and the average sales period.) Millen Corporation is a merchandiser that is preparing a master budget for the month of July. The company's balance sheet as of June30th is shown below:Millen CorporationBalance SheetJune 30Assets$ 120,000166, 00037, 200554,800CashAccounts receivableInventoryPlant and equipment, net of depreciationTotal assets$ 878,000Liabilities and Stockholders' EquityAccounts payable$ 93,000586,000199,000Common stockRetained earningsTotal liabilities and stockholders' equity$ 878,000

The operating cycle refers to the whole process cycle, begins with purchasing and ends with a…

Answered: Millen’s managers have made the…

FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Problem 1Q

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Millen’s managers have made the following additional assumptions and estimates:

Estimated sales for July and August are $310,000 and $330,000, respectively.
Each month’s sales are 20% cash sales and 80% credit sales. Each month’s credit sales are collected 30% in the month of sale and 70% in the month following the sale. All of the accounts receivable at June 30 will be collected in July.
Each month’s ending inventory must equal 20% of the cost of next month’s sales. The cost of goods sold is 60% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts payable at June 30 will be paid in July.
Monthly selling and administrative expenses are always $70,000. Each month $10,000 of this total amount is depreciation expense and the remaining $60,000 relates to expenses that are paid in the month they are incurred.
The company does not plan to buy or sell any plant and equipment during July. It will not borrow any money, pay a dividend, issue any common stock, or repurchase any of its own common stock during July.

STUCK ON (Calculate the estimated operating cycle for the month of July. (Hint: Use 30 days in the numerator to calculate the average collection period and the average sales period.)

Millen Corporation is a merchandiser that is preparing a master budget for the month of July. The company's balance sheet as of June
30th is shown below:
Millen Corporation
Balance Sheet
June 30
Assets
$ 120,000
166, 000
37, 200
554,800
Cash
Accounts receivable
Inventory
Plant and equipment, net of depreciation
Total assets
$ 878,000
Liabilities and Stockholders' Equity
Accounts payable
$ 93,000
586,000
199,000
Common stock
Retained earnings
Total liabilities and stockholders' equity
$ 878,000

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