Purpose a cash receipts and payments

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Reference no: EM1312663

Prepare a cash receipts and payments schedule based on the details furnished.

Carter Company has projected sales and production in units for the second quarter of next year as follows:

	April	May	June
Sales	60,000	40,000	50,000
Production	50,000	50,000	60,000

Required:

a. Cash production costs are budgeted at $6 per unit produced. Of these production costs, 40% are paid in the month in which they are incurred and the balance in the following month. Selling and administrative expenses (all of which are paid in cash) amount to $120,000 per month. The accounts payable balance on March 31 totals $192,000, all of which will be paid in April. Prepare a schedule for each month showing budgeted cash disbursements for Carter Company.

b. Assume that all units will be sold on account for $15 each. Cash collections from sales are budgeted at 60% in the month of sale, 30% in the month following the month of sale, and the remaining 10% in the second month following the month of sale. Accounts receivable on March 31 totaled $510,000 $(90,000 from February's sales and the remainder from March). Prepare a schedule for each month showing budgeted cash receipts for Carter Company.

Reference no: EM1312663

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