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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Solution Summary
The expert examines purchase budgets and expected cash collection. A schedule of expected cash collections for each of the months are determined.
Education
- Chartered Accountant (Equivalent to CPA in US), Institute of Charted Accountants of India
- Bachelor of Commerce, West Bengal University
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