Reference no: EM132786665
Question - Trimmers Corporation actual November and December unit sales and estimated unit sales for the following four months are as follows:
November 6,700 units
December 9,800 units
January 6,200 units
February 8,900 units
March 6,600 units
April 7,100 units
The company's inventory policy is to hold enough inventory at the end of the month to meet 30% of next month's sales requirements. Each inventory item costs $1.75. Cash disbursement on purchases is made as follows: 40% is paid in the month of purchase and 60% is paid in the month following purchase.
Each item sells for $4.00 and cash collection patterns are as follows:
20% of sales made in cash
Credit sales are collected as follows
35% in the month of sale
40% in the month following the sale
23% in the second month following the sale
2% are never collected
Required (THREE questions below) -
a) Estimate the purchases (in units) for the months of January through March.
b) Estimate the cash disbursements on purchases for the months of January through March. What is the accounts payable balance at the end of March?
c) Estimate the cash collections for the months of January through March. What is the accounts receivable balance at the end of March?