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.