Mast Corporation seeks your assistance in developing cash and other budget information for May, June, and July. At April 30, the company had cash of $12,000, accounts receivable of $859,000, inventories of $112,815, and accounts payable of $36,052. The budget is to be based on the following assumptions. Each month’s sales are billed on the last day of the month. Customers are allowed a 2 percent discount if payment is made within 10 days after the billing date. Receivables are recorded in the accounts at their gross amounts (not net of discounts). The billings are collected as follows: 65 percent within the discount period, 20 percent by the end of the month, and 12 percent by the end of the following month. Three percent is uncollectible. Purchase data are as follows. Of all purchases of merchandise and selling, general, and administrative expenses, 58 percent is paid in the month purchased and the remainder in the following month. The number of units in each month’s ending inventory equals 115 percent of the next month’s units of sales. The cost of each unit of inventory is $9. Selling, general, and administrative expenses, of which $4,000 is depreciation, equal 20 percent of the current month’s sales. Actual and projected sales follow: Dollars Units March $ 151,200 10,800 April 169,400 12,100 May 152,600 10,900 June 159,600 11,400 July 182,000 13,000 August 15,800 13,200 Required: a. Compute the budgeted purchases in dollars for May. b. Compute the budgeted purchases in dollars for June. c. Compute the budgeted cash collections during May. (Do not round intermediate calculations. Round your final answer to nearest whole dollar.) d. Compute the budgeted cash disbursements during June. (Do not round intermediate calculations. Round your final answer to nearest whole dollar.) e. Compute the budgeted number of units of inventory to be purchased during July.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter8: Budgeting

Section: Chapter Questions

Problem 3PA: Budgeted income statement and supporting budgets The budget director of Birding Homes Feeders Inc.,...

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Problem 13-58 (Algo) Budgeted Purchases and Cash Flows (LO 13-4, 5, 6)

Mast Corporation seeks your assistance in developing cash and other budget information for May, June, and July. At April 30, the company had cash of $12,000, accounts receivable of $859,000, inventories of $112,815, and accounts payable of $36,052. The budget is to be based on the following assumptions.

Each month’s sales are billed on the last day of the month.
Customers are allowed a 2 percent discount if payment is made within 10 days after the billing date. Receivables are recorded in the accounts at their gross amounts (not net of discounts).
The billings are collected as follows: 65 percent within the discount period, 20 percent by the end of the month, and 12 percent by the end of the following month. Three percent is uncollectible.

Purchase data are as follows.

Of all purchases of merchandise and selling, general, and administrative expenses, 58 percent is paid in the month purchased and the remainder in the following month.
The number of units in each month’s ending inventory equals 115 percent of the next month’s units of sales.
The cost of each unit of inventory is $9.
Selling, general, and administrative expenses, of which $4,000 is depreciation, equal 20 percent of the current month’s sales.
Actual and projected sales follow:

	Dollars	Units
March	$	151,200	10,800
April		169,400	12,100
May		152,600	10,900
June		159,600	11,400
July		182,000	13,000
August		15,800	13,200

Required:

a. Compute the budgeted purchases in dollars for May.
b. Compute the budgeted purchases in dollars for June.
c. Compute the budgeted cash collections during May. (Do not round intermediate calculations. Round your final answer to nearest whole dollar.)
d. Compute the budgeted cash disbursements during June. (Do not round intermediate calculations. Round your final answer to nearest whole dollar.)
e. Compute the budgeted number of units of inventory to be purchased during July.

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