Janus Products, Inc. is a merchandising company that sells binders, paper, and o

Question

Janus Products, Inc. is a merchandising company that sells binders, paper, and other school supplies. The company is planning its cash needs for the third quarter. In the past, Janus Products has had to borrow money during the third quarter to support peak sales of back-to-school materials, which occur during August. The following information has been assembled to assist in preparing a cash budget for the quarter: a. Budgeted monthly absorption costing income statements for July to October are as follows August September October $41,000 71,000 $51,000 $46,000 27,400 Sales 42,400 Cost of goods sold Gross margin Selling and administrative expenses: 24,400 30,400 16,600 28,600 20,600 18,600 Selling expense Administrative expense* 7,500 5,700 11,900 7,300 8,600 6,200 7,400 6,000 13,400 $ 3,400 9,400 5,800 5,200 Total selling and administrative expenses 13,200 19,200 14,800 Net operating income

Explanation / Answer

Schedule of Expected Cash Collections July aug Sep Quarter Oct Total sales T 41000 71000 51000 163000 46000 Cash Sales (20% for cash) S 8200 14200 10200 32600 Credit Sales (workingg) 32800 56800 40800 130400 May (31000*80%*20%) 4960 4960 June 20720 5920 26640 July (credit sales*10%,70%,20%) 3280 22960 6560 32800 Aug 5680 39760 45440 Sep 4080 4080 Total Collections 37160 48760 60600 146520 Merchandise Purchases Budget July aug Sep Quarter Oct Budgeted Cost of Goods Sold $24,400 $42,400 $30,400 $97,200 $27,400 Add Desired Ending Inventory (75%*next COGS $31,800 $22,800 $20,550.0 $20,550.0 Total Needs $56,200 $65,200 $50,950 $117,750 Less Beginning Inventory $18,500 $31,800 $22,800 $18,500 Required Purcahses $37,700 $33,400 $28,150 $99,250 Schedule of Expected Cash Disbursements- Merchandise Purchases (50% in same month and 50% in next month) July aug Sep Quarter Accounts payable $12,200 $12,200 July $18,850 $18,850 $37,700 Aug $16,700 $16,700 $33,400 Sep $14,075 $14,075 Total Disbursements $31,050 $35,550 $30,775 $97,375 Cash Budget July aug Sep Quarter Beginnning Cash Balance 8,100 $9,660 $22,870 8,100 Add Cash Collections 37,160 48,760 60,600 146,520 Total Cash Avail 45,260 58,420 83,470 154,620 Less Cash Disbursements For Inventory $31,050 $35,550 $30,775 $97,375 Purchase of Land 4550 4550 Payment of dividend 1050 1050 Total Cash Disbursements $35,600 $35,550 $31,825 $102,975 Excess(Deficiency) of Cash $9,660 $22,870 $51,645 $51,645 Financing: Borrowings: 0 0 0 Repayments: 0 0 Interest: 0 0 Total Financing 0 0 0 0 Ending Cash Balance $9,660 $22,870 $51,645 $51,645 If any doubt please comment

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