fundamentals of cost accounting fundamentals of cost accounting fundamentals of
ID: 2583966 • Letter: F
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fundamentals of cost accounting fundamentals of cost accounting fundamentals of cost accounting xpelises buus for a typical month in the coming year. Prepare 44. Budgeted Purchases and Cash Flows Buooration seeks your assistance in developing cash and other budget information o Mast Co and July. At April 30, the company had cash of $11,000, accounts receivable of (LO nventories of 5618,800, and accounts payable of $266,10. The budget is to bisemonth's sales are billed on the last day of the month. on the following assumptions s to be Customers are allowed a 2 percent discount if payment is made within 10 days after the discounts) billing date. Receivables are recorded in the accounts at their gross amounts (not net of The billings are collected as follows: 70 percent within the discount period, 15 percent by the end of the month, and 12 percent by the end of the following month. Three percent is uncollectible Purchase data are as follows: of all purchases of merchandise and selling, general, and administrative expenses, 60 percent is paid in the month purchased and the remainder in the fol lowing month The number of units in each month's ending inventory equals 120 percent of the next month's units of sales The cost of each unit of inventory is $10 Selling, general, and administrative expenses, of which $4,000 is depreciation, equal 15 per- cent of the current month's sales Actual and projected sales follow Dollars Units . .$708,000 11,800 March April... May 726,000 12,100 714,000 11,900 684,000 11,400 720,000 12,000 732,000 12,200 une.. July August ed Compute the following: Budgeted purchases in dollars for May geted purchases in dollars for June. Budgeted cash collections during May. Bud bud , geted cash disbursements during June. The budgeted number of units of inventory to be purchased during July (CPA adapted) (LExplanation / Answer
1 & 2. Budgeted Purchases in May and June
May
June
Sales
Units
11900
11400
Required Production
Units
11900
11400
Required Closing Inventory
Units
13680
14400
Total
25580
25800
Less: Opening Inventory
14280
13680
Required Purchases
11300
12120
Purchases
Dollars
$ 113,000
$ 121,200
3. Cash Collections During May
Sales
Units
11900
Sales
Dollars
$ 714,000
Sales for the Month of April
Dollars
$ 726,000
Cash Collections
Within Discount Period
$ 457,380
By the end of month
$ 108,900
Collection of March
$ 84,960
Total Collections
$ 651,240
4. Cash Disbursements during June
June
May
Purchases
$ 121,200
$ 113,000
Selling , General and administration expenses
$ 102,600
$ 107,100
Less: Depreciation
$ 4,000
$ 4,000
Total Purchases and expenses
$ 219,800
$ 216,100
60% Paid in this month
$ 131,880.0
40% Paid of May
$ 86,440.0
Cash Disbursements
$ 218,320.0
1 & 2. Budgeted Purchases in May and June
May
June
Sales
Units
11900
11400
Required Production
Units
11900
11400
Required Closing Inventory
Units
13680
14400
Total
25580
25800
Less: Opening Inventory
14280
13680
Required Purchases
11300
12120
Purchases
Dollars
$ 113,000
$ 121,200
3. Cash Collections During May
Sales
Units
11900
Sales
Dollars
$ 714,000
Sales for the Month of April
Dollars
$ 726,000
Cash Collections
Within Discount Period
$ 457,380
By the end of month
$ 108,900
Collection of March
$ 84,960
Total Collections
$ 651,240
4. Cash Disbursements during June
June
May
Purchases
$ 121,200
$ 113,000
Selling , General and administration expenses
$ 102,600
$ 107,100
Less: Depreciation
$ 4,000
$ 4,000
Total Purchases and expenses
$ 219,800
$ 216,100
60% Paid in this month
$ 131,880.0
40% Paid of May
$ 86,440.0
Cash Disbursements
$ 218,320.0
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