Questions -
1) Scalia Systems manufactures rugged handheld computers for use in adverse working environments. Scalia tries to maintain inventory at 40% of the following month's expected unit sales. Scalia began the year with 8,000 units in stock, based on the following unit sales projections prepared by the sales manager:
January 20,000
February 25,000
March 25,000
April 22,000
Prepare a schedule of planned unit production for January through May.
2) Logan Township acquired its water system from a private company on June 1. No receivables were acquired with the purchase. Therefore, total accounts receivable on June 1 had a zero balance.
Logan plans to bill customers in the month following the month of sale, and 70% of the resulting billings will be collected during the billing month. In the next following month, 90% of the remaining balance should be collectable. The remaining uncollectible amounts will relate to citizens who have moved away. Such amounts are never expected to be collected and will be written off.
Water sales during June are estimated at $4,000,000, and expected to increase 30% in July. August sales will be 10% less than July sales.
a) For each dollar of sales, how much is expected to be collected?
b) Estimate the monthly cash collections for June, July, August, and September.
c) As of the end of August, how much will be the estimated amount of receivables from which future cash flows are anticipated?