Question

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C TV BNIM PROBLEM 3 (20 points) Caribbean Tool and Die Company's forecasted sales for April; May: June; and July are $150,000; $225,000 $180,000; and $210.000; respectively. Sales are 50% cash and 50% credit with all accounts receivables collected in the month following the sale. Cost of goods sold is 60% of sales and ending inventory is maintained at $85,000 plus 20% of the following month's cost of goods sold. All inventory purchases are paid 20% in the month of purchase and 80% in the following month. 1) What are the cash collections budgeted for June? 2) What are the budgeted cash payments in June for inventory purchases? 3) What is the balance of accounts payable on the June 30 budgeted balance sheet?

Answer 1

1. budgeted cash collections for june:

cash sales in june ($180,000*50%)	90,000
credit sales of may collected in june ($225,000*50%)	125,000
budgeted cash collections for june	215,000

2.budgeted cash payments:

inventory required to be purchased in june.

cost of goods sold in june ($180,000*60%)	108,000
add: ending inventory (85,000 + *(20%*60%*210,000 july sales)	110,200
less:beginning inventory (85,000+ (20%*108,000 june cost of goods sold)	(106,600)
inventory required to be purchased	111,600

inventory required to be purchased in may.

cost of goods sold in may ($225,000*60%)	135,000
add:ending inventory (85,000+ (20%*60%*180,000 june sales)	106,600
less: beginning inventory (85,000 +(20%*135,000 may cost of goods sold)	(112,000)
inventory required to be purchased in may	129,600

cash payments in june for inventory purchases:

20 % of $111,600 worth purchased in june	22,320
80% of $129,600 worth purchased in may	103,680
cash payments in june	126,000

3.balance of accounts payable on june 30 budgeted balance sheet.

accounts payable (80% of $111,600 purchased in june)

$89,280