Reference no: EM13570487

Cash and Production Budget. P sells a single specialty product imported from Denmark. Sales for the six months ended Dec31 are as follows.

July                 50,000 units actual

August             70,000 actual

September       90,000 forecast

October           80,000 forecast

November       60,000 forecast

December        40,000 forecast

Each unit sells for $18. All sales are on credit. Collections on account take the following pattern.

Collected in month of sales                                         40%

Collected in month after sale                                      35%

Collected in the second month following sale 20%

Uncollectible                                                               5%

P maintains an ending inventory equal to 100% of the next month's sales. The cost of the units is $12 each. All purchases are on credit. The payables are paid60% in the month of purchase and 40% in the following month. Cash operating expenses are equal to $200,000 plus 15% of current month's sales.

The actual inventory on hand was:

July 31                        105,000 units

August 31                  135,000 units

Calculate units purchased for August and September. (Production Budgets)

Calculate collections for September.(Collection Budget)

Prepare a cash budget for September Beginning cash balance in September is $200,000.

Production Budget August                                         Production Budget September

Receipts Budget September                                       Cash Budget September