Question

Question 4 (11 marks) 

The following information pertains to the operating budgets for Casey Corporation. 

• Budgeted sales: $200,000 in January and $100,000 in February. 

• All sales are on credit. Collections for sales are 60% in the month of sale and 40% the next month. 

• Cost of goods sold (COGS) is 75% of sales.

 • Beginning accounts receivable is $0. 

• Beginning inventory is $14,000. 

• Beginning accounts payable is $80,000, of which 10% is related to sales in November the year before, the remainder is related to the sales in December the year before. 

 • All purchases are on credit. Purchases are paid 20% in the month of purchase, 60% the next month, the remainder in the month after the next. 

• Desired ending inventory is 20% of next month's COGS. 

Required: Compute the following: 

(a) Budgeted cash receipt from customers in February. (2 marks) 

(b) Budgeted Accounts Receivable balance at the end of February. (1 mark) 

(c) Budgeted purchases for January. (4 marks) 

(d) Budgeted cash payment to suppliers in January. Clearly show your workings in relation to purchases in relevant months. (4 marks)