Required InformationTES-417 Inc. is a retailer. Its accountants are preparing the company's 2nd quarter master budget. The company has thefollowing balance sheet as of March 31.TES-417 Inc.Balance SheetMarch 31AssetsCash$82,000Accounts receivableInventory52,5ee217,000Plant and equipment, net of depreciationTotal assetsLiabilities and Stockholders' EquityAccounts payable78,000Common stock347.00055,500Retained earningsTotal liabilities and stockholders' equityTES-417 accountants have made the following estimates:1. Sales for April, May, June, and July will be $280,000, $300.000, $290,000, and $310,000, respectively.2. All sales are on credit. Each month's credit sales are collected 35% in the month of sale and 65% in the month following the sale. All of the accounts receivable at March 31 will be collected in April.3. Each month's ending inventory must equal 25% of next month's cost of goods sold. The cost of goods sold is 75% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accountspayable at March 31 are related to previous merchandise purchases and will be paid in April.4. Monthly selling and administrative expenses are always $52,000. Each month $5,000 of this total amount is depreciation expense and the remaining $47,000 is spent for expenses that are paid in the month they are incurred.5. The company will not borrow money or pay or declare dividends during the 2nd quarter. The company will not issue any common stock or repurchase its own stock during the 2nd quarter.How much is the company's expected cash collections in the month of May?Multiple ChoiceOOOO$182,000$195,000$287,000$105,000

Expected cash collection is the collection of cash which has been received by the company during the…

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Business

Accounting

How much is the company's expected cash collections in the month of May?

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter13: Budgeting And Standard Costs

Section: Chapter Questions

Problem 13.2.6P: Budgeted income statement and supporting budgets The budget director of Jupiter Helmets Inc., with...

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Concept explainers

Master Budget

A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.

Sales Budget and Selling

A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.

Question

Required Information
TES-417 Inc. is a retailer. Its accountants are preparing the company's 2nd quarter master budget. The company has the
following balance sheet as of March 31.
TES-417 Inc.
Balance Sheet
March 31
Assets
Cash
$82,000
Accounts receivable
Inventory
52,5ee
217,000
Plant and equipment, net of depreciation
Total assets
Liabilities and Stockholders' Equity
Accounts payable
78,000
Common stock
347.000
55,500
Retained earnings
Total liabilities and stockholders' equity
TES-417 accountants have made the following estimates:
1. Sales for April, May, June, and July will be $280,000, $300.000, $290,000, and $310,000, respectively.
2. All sales are on credit. Each month's credit sales are collected 35% in the month of sale and 65% in the month following the sale. All of the accounts receivable at March 31 will be collected in April.
3. Each month's ending inventory must equal 25% of next month's cost of goods sold. The cost of goods sold is 75% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts
payable at March 31 are related to previous merchandise purchases and will be paid in April.
4. Monthly selling and administrative expenses are always $52,000. Each month $5,000 of this total amount is depreciation expense and the remaining $47,000 is spent for expenses that are paid in the month they are incurred.
5. The company will not borrow money or pay or declare dividends during the 2nd quarter. The company will not issue any common stock or repurchase its own stock during the 2nd quarter.
How much is the company's expected cash collections in the month of May?
Multiple Choice
OOOO
$182,000
$195,000
$287,000
$105,000

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