Generate monthly production and inventory schedule

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Reference no: EM131962302

Esquire Products Inc. expects the following monthly sales: January $ 44,000 July $ 38,000 February 35,000 August 42,000 March 28,000 September 45,000 April 30,000 October 50,000 May 24,000 November 58,000 June 22,000 December 40,000 Total sales = $456,000 Cash sales are 40 percent in a given month, with the remainder going into accounts receivable. All receivables are collected in the month following the sale. Esquire sells all of its goods for $2 each and produces them for $1 each. Esquire uses level production, and average monthly production is equal to annual production divided by 12.

a. Generate a monthly production and inventory schedule in units. Beginning inventory in January is 28,000 units.

b. Prepare a cash receipts schedule for January through December. Assume that dollar sales in the prior December were $20,000

c. Prepare a cash payments schedule for January through December. The production costs ($1 per unit produced) are paid for in the month in which they occur. Other cash payments (besides those for production costs) are $9,000 per month.

d. Construct a cash budget for January through December using the cash receipts schedule from part b and the cash payments schedule from part c. The beginning cash balance is $3,000, which is also the minimum desired.

e. Determine total current assets for each month. Include cash, accounts receivable, and inventory. The accounts receivable for a given month is equal to 60 percent of that month's sales. Inventory is equal to ending inventory (part a) times the cost of $1 per unit.

Reference no: EM131962302

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