Thirty percent of all sales are for cash; the remaining 70% are on account. Creditsales have the following collection pattern: Collected in the month of sale 60% Collected in the month following sale 35 Uncollectible 5 Prepare a schedule of cash collections for May through July. Compute the expected balance in Accounts Receivable as of July 31.
Thirty percent of all sales are for cash; the remaining 70% are on account. Creditsales have the f
ollowing collection pattern:
Collected in the month of sale | 60% |
Collected in the month following sale | 35 |
Uncollectible | 5 |
- Prepare a schedule of cash collections for May through July.
- Compute the expected balance in Accounts Receivable as of July 31.
- The following information has been extracted from the firm’s accounting records:
- 1)Allsalesaremadeonaccountat$20perunit.Sixtypercentofthesalesarecollectedinthemonthofsale;theremaining40%arecollectedinthefollowingmonth.Forecastedsalesforthefirst5monthsof20X2areasfollows:January,1,500units;February,1,600units;March,1,800units;April,2,000units;andMay,2,100units.
- 2)Managementwantstomaintainthefinishedgoodsinventoryat30%ofthefollowingmonth’ssales.
- 3)Watsonusesfourunitsofdirectmaterialineachfinishedunit.Thedirectmaterialpricehasbeenstableandisexpectedtoremainsooverthenext6months.Managementwantstomaintaintheendingdirectmaterialsinventoryat60%ofthefollowingmonth’sproductionneeds.
- 4)Seventypercentofallpurchasesarepaidinthemonthofpurchase;theremaining30%arepaidinthesubsequentmonth.
- 5)Watson’sproductrequires30minutesofdirectlabortime.Eachhourofdirectlaborcosts$7.
- Roundingcomputationstothenearestdollar,preparethefollowingforJanuarythroughMarch:
- 1)Salesbudget
- 2)Scheduleofcashcollections
- 3)Productionbudget
- 4)Directmaterialpurchasesbudget
- 5)Scheduleofcashdisbursementsformaterialpurchases
- 6)Directlaborbudget
- DeterminethebalancesinthefollowingaccountsasofMarch31:
- 1)AccountsReceivable
- 2)DirectMaterials
- 3)AccountsPayable