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?