Reference no: EM132650086

For the second quarter of the following year Cloaks Company has projected sales and production in units as follows:

                             Jan                  Feb                      Mar

Sales                     50,000         52,000                 57,000

Production               54,000           49,000               50,000

Cash-related production costs are budgeted at $10 per unit produced. Of these production costs, 40% are paid in the month in which they are incurred and the balance in the next month. $110,000 per month will account for Selling and administrative expenses. On January 31 the accounts payable balance totals $210,000, which will be paid in February.

All units are sold on account for $15 each. Cash collections from sales are budgeted at 60% in the month of sale, 20% in the month following the month of sale, and the remaining 20% in the second month following the month of sale. On January 1 accounts receivable totaled $600,000 ($100,000 from November's sales and the remaining from December).

Required:

Question 1. Prepare a schedule for each month showing budgeted cash disbursements for Cloaks Company.

Question 2. Prepare a schedule for each month showing budgeted cash receipts for Cloaks Company.