Question

1. ABC Company projects the next period sales will be 12,000 units. ABC Company desires ending inventory equal to

20% of the next months’s sales. What is the desired inventory?

2. ABC Company projects the next period sales will be 12,000 units. ABC Company desires ending inventory of 20% of the next month’s sales. If the beginning inventory is 100, and the current month’s sales are 14,000, what is the number of units that will need to be purchased for the current month?

3. ABC Company has sales forecasts of the following: January= $40,000; February = $65,000; March =$52,580. All sales are on account and are collected as follows: 20% in the current month, 50% in the month following, 25% in the second month following, and 5% uncollectable. What are the cash receipts for March?  

Please show work

 

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Question

    UnitsDollars  April (actual)4,500      $765,000     May (actual)3,400      578,000     June (budgeted)7,000      1,190,000     July (budgeted)5,500      935,000     August (budgeted)3,900      663,000   
 All sales are on credit. Recent experience shows that 26% of credit sales is collected in the month of the sale, 44% in the month after the sale, 25% in the second month after the sale, and 5% proves to be uncollectible. The product’s purchase price is $110 per unit. All purchases are payable within 15 days. Thus, 60% of purchases made in a month is paid in that month and the other 40% is paid in the next month. The company has a policy to maintain an ending monthly inventory of 22% of the next month’s unit sales plus a safety stock of 130 units. The April 30 and May 31 actual inventory levels are consistent with this policy. Selling and administrative expenses for the year are $1,344,000 and are paid evenly throughout the year in cash. The company’s minimum cash balance at month-end is $130,000. This minimum is maintained, if necessary, by borrowing cash from the bank. If the balance exceeds $130,000, the company repays as much of the loan as it can without going below the minimum. This type of loan carries an annual 11% interest rate. On May 31, the loan balance is $39,500, and the company’s cash balance is $130,000. (Round final answers to the nearest whole dollar.)rev: 11_19_2013_QC_40413, 10_21_2014_QC_56990
 1. value:2.30 points Required information   Required:1.Prepare a table that shows the computation of cash collections of its credit sales (accounts receivable) in each of the months of June and July.

 

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