Comprehensive budgeting problem (Learning Objectives 2 & 3) Martin Manufacturing

Question

Comprehensive budgeting problem (Learning Objectives 2 & 3) Martin Manufacturing is preparing its master budget for the first quarter of the upcoming year. The following data pertain to Martin Manufacturing's operations: P9-57A Current Assets as of December 31 (prior year): $ 4,500 $ 47,000 $ 15,700 $120,000 $42,400 $124,000 Retained earnings$ 23,100 Cash esesese Accounts receivable, net..uuuu....» Property, plant, and equipment, net. a. Actual sales in December were $70,000. Selling price per unit is projected to remain stable at $10 per unit throughout the budget period. Sales for the first five months of the upcoming year are budgeted to be as follows: $ 80,000 $92,000 $99,000 $97,000 $ 85,000 44684 8086 64844 848 64844844894844484444444844944484484 68444E484 Februar March Ma b. Sales are 30% cash and 70% credit. All credit sales are collected in the month follow- ing the sale.

Explanation / Answer

Cash sales = 30%

Credit sales = 70%

Credit sales are collected in the month following the sale

Budgeted cash collections for January = January cash sales + December Accounts Receivable

Budgeted cash collections for February = February cash sales + January Credit sales

Budgeted cash collections for March = March cash sales + February Credit sales  

Cash collections Budget

For the Quarter ended March 31

January February March Quarter Cash sales 24,000 (80,000*30%) 27,600 (92,000*30%) 29,700 (99,000*30%) 81,300 Credit sales 47,000 56,000 (80,000*70%) 64,400 (92,000*70%) 167,400 Total cash collections 71,000 83,600 94,100 248,700

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