Question

Purchases and Cash Budgets
On July 1, MTC Wholesalers had a cash balance of $175,000 and accounts payable of $99,000. Actual sales for May and June, and budgeted sales for July, August, September, and October are:

Month	Actual Sales	Month	Budgeted Sales
May	$150,000	July	$ 90,000
June	160,000	August	80,000
		September	100,000
		October	120,000

All sales are on credit with 75 percent collected during the month of sale, 20 percent collected during the next month, and 5 percent collected during the second month following the month of sale. Cost of goods sold averages 70 percent of sales revenue. Ending inventory is one-half of the next month's predicted cost of sales. The other half of the merchandise is acquired during the month of sale. All purchases are paid for in the month after purchase. Operating costs are estimated at $28,000 each month and are paid during the month incurred.

Required
Prepare purchases and cash budgets for July, August, and September.

Do not use a negative sign with your answers.

MTC Wholesalers
Purchases Budget
For the Months of July, August, and September
		July	August	September
Inventory required, current sales		$Answer	$Answer	$Answer
Desired ending inventory		Answer	Answer	Answer
Total inventory needs		Answer	Answer	Answer
Less beginning inventory		Answer	Answer	Answer
Purchases		$Answer	$Answer	$Answer

Do not use a negative sign with your answers.

MTC Wholesalers
Cash Budget
For the Months of July, August, and September
		July	August	September
Cash balance, beginning		$Answer	$Answer	$Answer
Cash receipts
Current month's sales
Previous month's sales
Sales two months prior
Total receipts
Cash available
Cash disbursements:
Purchases
Operating costs
Total disbursements
Cash balance, ending

Production and Purchases Budgets
At the beginning of October, Comfy Cushions had 1,600 cushions and 10,500 pounds of raw materials on hand. Budgeted sales for the next three months are:

Month	Sales
October	8,000 cushions
November	10,000 cushions
December	13,000 cushions

Comfy Cushions wants to have sufficient raw materials on hand at the end of each month to meet 25 percent of the following month's production requirements and sufficient cushions on hand at the end of each month to meet 20 percent of the following month's budgeted sales. Five pounds of raw materials, at a standard cost of $0.90 per pound, are required to produce each cushion.

Required
a. Prepare a production budget for October and November.
Do not use a negative sign with your answers.

Comfy Cushions
Production Budget
For the Months of October and November
	October	November	December
Unit Sales
Desired ending inventory
Finished goods requirements
Less beginning inventory
Production requirements

b. Prepare a purchases budget in units and dollars for October.
Do not use a negative sign with your answers.

Comfy Cushions
Purchases Budget
For the Month of October
		October	November
Production requirements
Desired ending inventory
Raw materials requirements
Less beginning inventory
Purchase requirements (units)
Purchase requirements (in dollars)

Cash Disbursement
Timber Company is in the process of preparing its budget for next year. Cost of goods sold has been estimated at 70 percent of sales. Lumber purchases and payments are to be made during the month preceding the month of sale. Wages are estimated at 15 percent of sales and are paid during the month of sale. Other operating costs amounting to 10 percent of sales are to be paid in the month following the month of sale. Additionally, a monthly lease payment of $14,000 is paid for computer services. Sales revenue is forecast as follows

Month	Sales Revenue
February	$170,000
March	210,000
April	220,000
May	260,000
June	240,000
July	280,000

Required
Prepare a schedule of cash disbursements for April, May, and June.
Do not use a negative sign with your answers.

Timber Company
Schedule of Cash Disbursements
April, May, and June
	April	May	June
Lumbers purchases
Wages
Operating expenses
Lease payment
Total disbursements

Answer 1

01 Wholesalers Purchases Budget For the Months of July, August, and September August September July 63000 56000 28000 35000 91000 91000 31500 28000 59500 63000 Inventory required, current sales (70 % of sales) Desired ending inventory (50% of next month cost of sales) Total inventory needs 70000 42000 112000 Less beginning inventory (50% of current month cost f sales) 35000 Purchases 77000 MTC Wholesalers Cash Budget For the Months of July, August, and September August September July 175000 155000 Cash balance, beginning Cash receipts 153500 cash receipts from customer Current month's sales (75 %6) Previous month's sales (20%) Sales two months prior (5%) July September August 80000 0.75 100000*0.75 90000 0.2 150000 0.05 160000*0.05 90000 0.05 Current month's sales (75%) 67500 60000 32000 18000 7500 107000 86000 75000 90000 0.75 160000 0.2 80000 0.2 Previous month's sales (20%) 16000 Sales two months prior (56) 8000 4500 Total receipts 95500 282000 241000 Cash available 249000 Cash disbursements: 99000 59500 28000 28000 Purchases 63000 Operating costs 28000 127000 87500 155000 153500 Total disbursements 91000 Cash balance, ending 158000 Sheet377 Sheet378 Sheet379 Sheet381 Sheet382 Sheet383 Sheet384 Sheet385 Sheet380. ENG 22:57 UP 21/06/2019

Q2 Part a: Comfy Cushions Production Budget For the Months of October and November October November December 10000 2600 Unit Sales 8000 13000 Desired ending inventory (20 % of next month unit sales) 2000 10000 Finished goods requirements 12600 Less beginning inventory Production requirements 1600 8400 2000 10600 Part b Comfy Cushions Purchases Budget For the Month of October October November Production requirements (Production units x 5) 42000 53000 Desired ending inventory (25% of next month Production requirement) Raw materials requirements 13250 55250 Less beginning inventory 10500 Purchase requirements (units) 44750 Purchase requirements (in dollars) 44750*0.9 40275 Sheet377 Sheet380 Sheet381 Sheet382 Sheet383 Sheet384 Sheet385 e Sheet378 Sheet379 22:59 21/06/2019

Q3 Timber Company Schedule of Cash Disburseme nts April, May, and June April 182000 May June Lumbers purch ases Wages Operating expen ses 168000 196000 39000 33000 36000 26000 21000 22000 Lease payment 14000 14000 14000 Total disbursements 243000 250000 272000 April Lumbers purchases 260000*0.7 |240000*0.7 280000*0.7 working May June Wages 220000*0.15 260000*0.15 240000*0.15 Operatingexpenses 210000*0.1 220000*0.1 260000*0.1 14000 14000 Lease payment 14000