Prepare the cash collections budget for January, February, and March, as well as a summary for the first quarter.Birdfeeders Unlimited makes backyard birdfeeders. The company sells the birdfeeders to home improvement stores. $15Sales price per birdfeeder 1.5Board feet of wood required for each birdfeeder $4Cost per board foot (actual) 10%Desired ending wood inventory stated as a percentage of next month’s production requirements 20%Desired ending finished goods inventory (finished birdfeeders) stated as a percentage of next month’s sales $550,000Total cost of direct materials purchases in December 45% of direct materials purchases are paid in the month of purchase 55%of direct materials purchases are paid in the month after purchase UnitsOctober actual sales (prior year)November actual sales (prior year)December actual sales (prior year)January projected sales92,00085,00078,00080,000February projected sales90,000March projected sales95,000April projected sales105,00020% of the total sales are cash sales80% of the total sales are credit salesThe company's collection history indicates that:80% of credit sales is collected in the month after the sale10% is collected two months after the sale6% is collected three months after the sale4% is never collected

Cash budget: It is a budget of estimated cash receipts and payments for a period. The cash receipts…

Answered: Prepare the cash collections budget for…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Concept explainers

Question

Prepare the cash collections budget for January, February, and March, as well as a summary for the first quarter.

Birdfeeders Unlimited makes backyard birdfeeders. The company sells the birdfeeders to home improvement stores.
	$15	Sales price per birdfeeder
	1.5	Board feet of wood required for each birdfeeder
	$4	Cost per board foot (actual)
	10%	Desired ending wood inventory stated as a percentage of next month’s production requirements
	20%	Desired ending finished goods inventory (finished birdfeeders) stated as a percentage of next month’s sales

	$550,000	Total cost of direct materials purchases in December
	45%	of direct materials purchases are paid in the month of purchase
	55%	of direct materials purchases are paid in the month after purchase

Units
October actual sales (prior year)
November actual sales (prior year)
December actual sales (prior year)
January projected sales
92,000
85,000
78,000
80,000
February projected sales
90,000
March projected sales
95,000
April projected sales
105,000
20% of the total sales are cash sales
80% of the total sales are credit sales
The company's collection history indicates that:
80% of credit sales is collected in the month after the sale
10% is collected two months after the sale
6% is collected three months after the sale
4% is never collected

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions