Question

Problem 10-39A (Part Level Submission)

The controller of Harrington Company estimates sales and production for the first four months of 2016 as follows:

		January		February		March		April
Sales		$30,900		$40,400		$53,600		$25,400
Production in units		1,150		1,680		2,000		2,630

Sales are 40% cash and 60% on account, and 60% of credit sales are collected in the month of the sale. In the month after the sale, 40% of credit sales are collected. It takes 4 kg of direct material to produce a finished unit, and direct materials cost $5 per kg. All direct materials purchases are on account, and are paid as follows: 40% in the month of the purchase, 60% the following month. Ending direct materials inventory for each month is 40% of the next month’s production needs.

January’s beginning materials inventory is 1,840 kg. Suppose that both accounts receivable and accounts payable are zero at the beginning of January.

Question: Fill in the blank

What is the cash balance for the period January-March? (Round answer to 0 decimal places, e.g. 125.) Cash balances LINK TO TEXT Attempts: 0 of 1 used SAVE FOR LATER SUBMIT ANSWER

Thank you!!

HOW IS THIS TOO LONG???? PLEASE HELP

Answer 1

Cash Balance for the period January to March

is cash balance $ 30,620

Working Notes
Raw Material Cunsumption Budget
Items	January	February	March	April
Production in units	1,150	1,680	2,000	2,630
Material Required for 1 unit of FG (K.G)	4	4	4	4
Total Material Required (k.g)	4,600	6,720	8,000	10,520
Raw material purchase budget (KG)
Consumption	4,600	6,720	8,000	10,520
Add:Closing	2,688	3,200	4,208
Less: Opening	1,840	2,688	3,200	4,208
Purchase	5,448	7,232	9,008	6,312
Cost of 1 k.g of material ($)	5	5	5	5
Total cost of Material ($)	27,240	36,160	45,040	31,560
Payment
40% in the same month	10,896	14,464	18,016	12,624
60% in the following month	-	16,344	21,696	27,024
Total Payment ($)	10,896	30,808	39,712	39,648
Cash Collection
Sales ($)	30,900	40,400	53,600	25,400
40% cash sales (A)	12,360	16,160	21,440	10,160
Credit Sales 60%	18,540	24,240	32,160	15,240
60% of credit sales collected in the same month (B)	11,124	14,544	19,296	9,144
40% of credit sales collected in the following month (C )		7,416	9,696	12,864
Total Cash Collection (A+B+C) ( $)	23,484	38,120	50,432	32,168
Cash Budget
Opening	-	12,588	19,900
Collection	23,484	38,120	50,432
Payment	10,896	30,808	39,712
Closing	12,588	19,900	30,620	-