Question

Artec Company is its product for $190 per unit is actual and budgeted sales follow April (actual) May (actual) 7,500 1,300 .000 6,500 Dollars $1,425,000 342.000 1.140,000 1,235,000 July hodgeted) budgeted) August (budgeted) 5.900 7 41.000 All sales are on Credit Recent experience shows that 24% of credit ses collected in the month of the sale 46% in the month after the sale, in the second month after the sale and 2 proves to be uncollectible. The product's purchase price p erunt 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 20% of the next month's unit sales plus a sety stock of 100 units. The April 30 and May 31 actual inventory levels are consistent with this policy Selling and administrative expenses for the year are $1884.000 and are paid evenly throughout the year in cash. The company's mum cash balance at month and is $30,000. This minimum is maintained, necessary by borrowing cash from the bank the balance exceeds $100,000, 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 Required: L. Prepare a schedule that shows the computation of cash collections of its credit sales accounts receivable in each of the months of June and July 2. Prepare a schedule that shows the computation of budgeted ending inventories in units) for April May June, and 2. Prepare the merchandise purchases budget for May June, and July. Report calculations in units and then show the dollar amount of purchases for each month 4. Prepare a schedule showing the computation of cash payments for product purchases for June and July 5. Prepare a cash budget for June and July, including any loan activity and interest expense. Compute the loan balance at the end of each month Complete this question by entering your answers in the tabs below. Required Required Required Required Required Prepare a schedule that shows the computation of cash collections of its credit sales (accounts receivable) in each of the months of June and July. Percent collected in May June July April August August Credit cales 342.000 May June August 741 000

Answer 1

Prepare a schedule of cash collections from credit sales (accounts receivable) in the months of June and July as shown below: Percent Collected in May June July Total April August 24% 46% 24% Credit sales from: April May June July August 100% 100% 100% 100% 100% 28% 46% 24% 28% 46% 24% 28% 46% 24% Amount Collected in May June July Total April August Credit sales from: April May June July August Total Collections $1,425,000 $342.000 $1,140,000 $1,235,000 $741,000 $399,000 $157,320 $273,600 $95,760 $524,400 $296,400 $829.920 916,560

Prepare a schedule of budgeted ending inventories for the months of April, May, June, and July as shown below: A Company Budgeted Ending Inventory For April, May, June and July April May Next month's budgeted sales (units) [a] 1,800 6,000 Ratio of inventory to future sales [b] | 20% 20% Budgeted "base" ending inventory [(a xb) + 100 units] 460 1,300 June 6,500 20% July 3.900 20% 1,400 880 3. Prepare the merchandise purchases budget for the months of May, June and July as shown below: A Company Merchandise Purchases Budget For May, June and July May Budgeted sales (units) [a] 1.800 Budgeted ending inventory [b] 1,300 Required units of available merchandise (c = a × b] 3.100 Budgeted beginning inventory [d] 460 Budgeted purchases (units) [e = C-d] 2.640 Purchase price per unit (f) $1101 Budgeted cost of merchandise purchase [e xf] $290,400 June 6.000 1,400 7.400 1,300 6.100 $110 $671,000 July 6.500 880 7.380 1.400 5,980 $110 $657,800

Prepare a schedule of cash payments for the product purchases during the months of June and July as shown below: August 40% Cash payments on product purchases (for June and July) Percent Paid in Total April May June July From purchases in: May 100% 60% 40% June 100% 60% 40% July 100% 60% Amount Paid In Total April May June July From purchases in: May $290.400 $116,160 June $671.000 $402.600 $268.400 July $657,800 $394.680 Total Payments $518,760 $663,080 August