(SO 4) P10-55B The controller of Kari Company estimates sales and production for

Question

(SO 4) P10-55B The controller of Kari Company estimates sales and production for the first four months of 2016 as follows: Prepare a cash budget for a month. Sales Production in units anuary $40,000 2,000 $50,000 2,500 March April $35,000 3,500 $60,000 3,000 Sales are 60% cash and 40% on account, and 40% of credit sales are collected in the month of the sale. In the month after the sale, 60% ofcredit sales are collected. It takes 5 kg ofdirect material to produce a finished unit, and direct materials cost $6 per kg. All direct materials purchases are on account, and are paid as follows: 60% in the month of the purchase, 40% the following month. Ending direct materials inventory for each month is 20% of the next month's production needs. January's beginning materials inventory is 2,000 kg. Suppose that both accounts receivable and accounts payable are zero at the beginning of January Instructions (a) What are the total cash sales for the January-March quarter? (b) What is the accounts receivable balance at the end of March? (c) What is the direct materials inventory balance at the end of March? (d) What are material purchases costs for February? (e) What are cash payments on account for February? (f) What is the ending balance in accounts payable for March? (g) What is the cash balance for the period January-March? (b) S14,400 (e) $72,000 (f) $37,200 (adapted from CGA-Canada, now CPA Canada)

Explanation / Answer

a. What are the total cash sales for the january-march quarter:-

b. What is the accounts receivable balance at the end of march:-

60,000 * 60% = $36,000

c. What is the direct materials inventory balance at the end of march:-

20% of (3,500*5) = $3,500

d. what are dmaterial purchases costs for february:-

e. What are cash payments on account for Feb:-

* [(2,000*5) - 2,000 + (2,500*5*20%)] * 6 = 63,000

f. What the ending balance in accounts payable for march:-

Note:- As per chegg guidelines if more than four subpart is posted in single question than we liable to answer only first four sub part.

Please Rate or comment if you have any doubt regarding this solution.

Particulars January Feb March Total Total sales 40,000 50,000 60,000 150,000 Cash sales (60%) 24,000 30,000 36,000 90,000

Related Questions

Navigate

• Browse (All)
• Browse #
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.