Nbspone stop jersey stop osjs sells sports jerseys osjss

Assignment Help Financial Accounting

Reference no: EM13370723

One Stop Jersey Stop (OSJS) sells sports jerseys. OSJS's management accountant has gathered the subsequent information for OSJS.

Month Sales Purchases
February $42,000 $17,640
March $48,000 $20,160
April $54,000 $22,680
May $50,000 $21,000

Cash is collected from customers in the subsequent manner:
Month of the sale 25%
First month following the sale 40%
Second month following the sale 20%
Third month following the sale 10%
Uncollectable 5%

Purchases of inventory are paid as follows:
Cash payment in month of purchase 40%
Cash payment in month following purchase 60%

Additional information:
Labor costs equal 19 percent of sales
Other operating costs equal $15,000 per month that amount includes $4,000 of depreciation.
Labor and operating costs are paid in the month incurred.
The cash balance on 1^st April is $4,000.

Required: Show all supporting calculations for credit.
Evaluate the amount of cash receipts for March, April and May.
Evaluate the amount of cash disbursements for March, April and May.
Evaluate the cash balance at 31^st May.
Show two important reasons why OSJS should prepare cash budgets.

Reference no: EM13370723

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