Compute the cash Receipts and cash disbursements schedule.
Tilson Company has projected sales and production in units for the second quarter of the coming year as follows:
|
|
April
|
May
|
June
|
|
Sales
|
55,000
|
45,000
|
65,000
|
|
Production
|
65,000
|
55,000
|
55,000
|
Cash-related production costs are budgeted at $7 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 will amount to $110,000 per month. The accounts payable balance on March 31 totals $193,000, which will be paid in April.
All units are sold on account for $16 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 April 1 totaled $520,000 $(100,000 from February's sales and the remainder from March).
Required:
a. Prepare a schedule for each month showing budgeted cash disbursements for the Tilson Company.
b. Prepare a schedule for each month showing budgeted cash receipts for Tilson Company.