Shredder Manufacturing has the following projected unit sales (at $18 per unit) for four months of operations:MonthUnit SalesJanuary60,000February72,000March76,800April84,000Twenty-five percent of the customers are expected to pay in the month of sale and take a 3 percent discount; 70 percent of the customers are expected to pay in the month following sale. The remaining 5 percent will never pay.It takes two pounds of raw material (costing $0.75 per pound) to produce a unit of product. In January, no raw material is in beginning inventories, but management wants to end each month with enough material for 20 percent of the next month’s production. (April’s production is assumed to be 81,600 units.) Shredder Manufacturing pays for 60 percent of its material purchases in the month of purchase and 40 percent in the following month.Each unit of product requires 0.5 hours of labor time. Labor is paid $15 per hour and is paid in the same month as worked. Overhead is estimated to be $2 per unit plus $60,000 per month (including depreciation of $28,800). Overhead costs are paid as incurred.Shredder will begin January with no Work in Process or Finished Goods Inventory. Inventory policy for these two accounts is set at zero ending WIP and 25 percent of the following month’s sales for FG.f. Prepare a cash receipts schedule for sales and a cash payments schedule for material purchased. **Cash Receipts Schedule**| | Jan. | Feb. | March | Total ||----------------|------|------|-------|-------|| Jan. | $ | 0 | $ | 0 || Feb. | 0 | $ | 0 | 0 || March | 0 | 0 | $ | 0 || **Total** | $ | $ | $ | 0 |**Legend**: - '$' represents a dollar amount of cash- 'X' represents no cash receipt for that month- '✔' represents an expected cash receipt for that month**Cash Payments Schedule**| | Jan. | Feb. | March | Total ||----------------|------|------|-------|-------|| Jan. | $ | 0 | $ | 0 || Feb. | 0 | $ | 0 | 0 || March | 0 | 0 | $ | 0 || **Total** | $ | $ | $ | 0 |**Legend**: - '$' represents a dollar amount of cash- 'X' represents no cash payment for that month- '✔� represents an expected cash payment for that month**Explanation:**The above tables illustrate the cash receipts and payments schedules. Both tables are structured with months (January, February, and March) listed vertically and horizontally to track transactions across these months.**Cash Receipts Schedule Explanation:**- The top table titled "Cash Receipts Schedule" tracks the expected cash receipts for each month.- It shows that no actual dollar amounts are listed (indicated by blank spaces where dollar amounts should be), but it does note where receipts are expected with checkmarks (✔) and where none are expected with crosses (X).**Cash Payments Schedule Explanation:**- Similarly, the bottom table titled "Cash Payments Schedule" details expected cash payments for each month.- It follows the same structure with dollar amounts not being specified and expectations being indicated by checkmarks (✔) and crosses (X).In both tables, you will notice a recurring pattern of no amounts specified for most months, and expectations of cash activities highlighted with symbols for clarity in planning.

Budgeting is a process of estimating future receipts and payments so that appropriate decisions can…

Shredder Manufacturing has the following projected unit sales (at $18 per unit) for four months of operations: Month Unit Sales January 60,000 February 72,000 March 76,800 April 84,000 Twenty-five percent of the customers are expected to pay in the month of sale and take a 3 percent discount; 70 percent of the customers are expected to pay in the month following sale. The remaining 5 percent will never pay. It takes two pounds of raw material (costing $0.75 per pound) to produce a unit of product. In January, no raw material is in beginning inventories, but management wants to end each month with enough material for 20 percent of the next month’s production. (April’s production is assumed to be 81,600 units.) Shredder Manufacturing pays for 60 percent of its material purchases in the month of purchase and 40 percent in the following month. Each unit of product requires 0.5 hours of labor time. Labor is paid $15 per hour and is paid in the same month as worked. Overhead is estimated to be $2 per unit plus $60,000 per month (including depreciation of $28,800). Overhead costs are paid as incurred. Shredder will begin January with no Work in Process or Finished Goods Inventory. Inventory policy for these two accounts is set at zero ending WIP and 25 percent of the following month’s sales for FG. f. Prepare a cash receipts schedule for sales and a cash payments schedule for material purchased.

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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Shredder Manufacturing has the following projected unit sales (at $18 per unit) for four months of operations:

Month	Unit Sales
January	60,000
February	72,000
March	76,800
April	84,000

Twenty-five percent of the customers are expected to pay in the month of sale and take a 3 percent discount; 70 percent of the customers are expected to pay in the month following sale. The remaining 5 percent will never pay.

It takes two pounds of raw material (costing $0.75 per pound) to produce a unit of product. In January, no raw material is in beginning inventories, but management wants to end each month with enough material for 20 percent of the next month’s production. (April’s production is assumed to be 81,600 units.) Shredder Manufacturing pays for 60 percent of its material purchases in the month of purchase and 40 percent in the following month.

Each unit of product requires 0.5 hours of labor time. Labor is paid $15 per hour and is paid in the same month as worked. Overhead is estimated to be $2 per unit plus $60,000 per month (including depreciation of $28,800). Overhead costs are paid as incurred.

Shredder will begin January with no Work in Process or Finished Goods Inventory. Inventory policy for these two accounts is set at zero ending WIP and 25 percent of the following month’s sales for FG.

f. Prepare a cash receipts schedule for sales and a cash payments schedule for material purchased.

**Cash Receipts Schedule**

| | Jan. | Feb. | March | Total |
|----------------|------|------|-------|-------|
| Jan. | $ | 0 | $ | 0 |
| Feb. | 0 | $ | 0 | 0 |
| March | 0 | 0 | $ | 0 |
| **Total** | $ | $ | $ | 0 |

**Legend**:
- '$' represents a dollar amount of cash
- 'X' represents no cash receipt for that month
- '✔' represents an expected cash receipt for that month

**Cash Payments Schedule**

| | Jan. | Feb. | March | Total |
|----------------|------|------|-------|-------|
| Jan. | $ | 0 | $ | 0 |
| Feb. | 0 | $ | 0 | 0 |
| March | 0 | 0 | $ | 0 |
| **Total** | $ | $ | $ | 0 |

**Legend**:
- '$' represents a dollar amount of cash
- 'X' represents no cash payment for that month
- '✔� represents an expected cash payment for that month

**Explanation:**

The above tables illustrate the cash receipts and payments schedules. Both tables are structured with months (January, February, and March) listed vertically and horizontally to track transactions across these months.

**Cash Receipts Schedule Explanation:**
- The top table titled "Cash Receipts Schedule" tracks the expected cash receipts for each month.
- It shows that no actual dollar amounts are listed (indicated by blank spaces where dollar amounts should be), but it does note where receipts are expected with checkmarks (✔) and where none are expected with crosses (X).

**Cash Payments Schedule Explanation:**
- Similarly, the bottom table titled "Cash Payments Schedule" details expected cash payments for each month.
- It follows the same structure with dollar amounts not being specified and expectations being indicated by checkmarks (✔) and crosses (X).

In both tables, you will notice a recurring pattern of no amounts specified for most months, and expectations of cash activities highlighted with symbols for clarity in planning.

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