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    Purchase budget & expected cash collection.

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    At March 31 Streuling Enterprises, a merchandising firm, had an inventory of 38,000 units, and it had accounts receivable totaling $85,000. Sales, in units, have been budgeted as follows for the next four months:

    April 60,000
    May 75,000
    June 90,000
    July 81,000

    Streuling's board of directors has established a policy to commence in April that the inventory at the end of each month should contain 40% of the units required for the following month's budgeted sales.
    The selling price is $2 per unit. One-third of sales are paid for by customers in the month of the sale, the balance is collected in the following month.
    Required:
    a. Prepare a merchandise purchases budget showing how many units should be purchased for each of the months April, May, and June.
    b. Prepare a schedule of expected cash collections for each of the months April, May, and June.

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    https://brainmass.com/business/cash-budgeting/purchase-budget-expected-cash-collection-260972

    Solution Summary

    The expert examines purchase budgets and expected cash collection. A schedule of expected cash collections for each of the months are determined.

    $2.19

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