Question

For the second quarter of the following year Cloaks Company has projected sales and production in units as follows: Jan Feb Mar Sales 50,000 $2,000 57,000 Production 54,000 49,000 50,000 Cash-related production costs are budgeted at $12 per unit produced. Of these production costs, 40% are paid in the month in which they are incurred and the balance in the next month. $125,000 per month will account for Selling and administrative expenses. On January 31 the accounts payable balance totals $225,000, which will be paid in February All units are sold on account for $17 each. Cash collections from sales are budgeted at 60% in the month of sale, 20% in the month following the month of sale, and the remaining 20% in the second month following the month of sale. On January 1 accounts receivable totaled $655,000 ($140,000 from November's sales and the remaining from December). Required: 1. Prepare a schedule for each month showing budgeted cash disbursements for Cloaks Company (5 marks) 2083 FINAL EXAM BBA ONTARIO YORKVILLE 2 Prepare a schedule for each month showing budgeted cash receipts for Cloaks Company. (5 marks)

Answer 1

Cash disbursement schedule
	Cell Reference	Particulars	Jan	Feb	March
	A	Accounts Payable balance		225000
	B	Production units	54,000	49,000	50,000
	C	Cash Production cost $ 12 per unit	648,000	588,000	600,000
	D=C*40%	40% paid in same month	259,200	235,200	240,000
	E	Balance in next month		388,800	352,800
	F	Selling and distribution expenses	125,000	125,000	125,000
	G=A+D+E+F	Total cash disbursement	384,200	974,000	690,800

Cash Collection Schedule
	Cell Reference	Particulars	Jan	Feb	March
	A	Beginning Trade Receivable-November sale	140,000
	B	Beginning Trade Receivable-December sale	257,500	257,500
	C	Sales in no of units	50,000	52,000	57,000
	D=C*17	Sales value @ 12	850,000	884,000	969,000
	E	Collection in the month of sale 60%	510,000	530,400	581,400
	F	Collection in the immediate next of sale 20%		170,000	176,800
	G	Collection in the immediate second month of sale 20%			170,000
	H=A+B+E+F+G	Total cash collection	907,500	957,900	928,200

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