Millen’s managers have made the following additional assumptions and estimates Estimated sales for July and August are $310,000 and $330,000, respectively. Each month’s sales are 20% cash sales and 80% credit sales. Each month’s credit sales are collected 30% in the month of sale and 70% in the month following the sale. All of the accounts receivable at June 30 will be collected in July. Each month’s ending inventory must equal 20% of the cost of next month’s sales. The cost of goods sold is 60% 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 June 30 will be paid in July. Monthly selling and administrative expenses are always $70,000. Each month $10,000 of this total amount is depreciation expense and the remai
Millen’s managers have made the following additional assumptions and estimates Estimated sales for July and August are $310,000 and $330,000, respectively. Each month’s sales are 20% cash sales and 80% credit sales. Each month’s credit sales are collected 30% in the month of sale and 70% in the month following the sale. All of the accounts receivable at June 30 will be collected in July. Each month’s ending inventory must equal 20% of the cost of next month’s sales. The cost of goods sold is 60% 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 June 30 will be paid in July. Monthly selling and administrative expenses are always $70,000. Each month $10,000 of this total amount is depreciation expense and the remai
Chapter7: Budgeting
Section: Chapter Questions
Problem 3PA: Echo Amplifiers prepared the following sales budget for the first quarter of 2018: It also has this...
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Millen’s managers have made the following additional assumptions and estimates
- Estimated sales for July and August are $310,000 and $330,000, respectively.
- Each month’s sales are 20% cash sales and 80% credit sales. Each month’s credit sales are collected 30% in the month of sale and 70% in the month following the sale. All of the
accounts receivable at June 30 will be collected in July. - Each month’s ending inventory must equal 20% of the cost of next month’s sales. The cost of goods sold is 60% 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 June 30 will be paid in July.
- Monthly selling and administrative expenses are always $70,000. Each month $10,000 of this total amount is
depreciation expense and the remaining $60,000 relates to expenses that are paid in the month they are incurred. - The company does not plan to buy or sell any plant and equipment during July. It will not borrow any money, pay a dividend, issue any common stock, or repurchase any of its own common stock during July.
( Calculate the estimated accounts receivable turnover and inventory turnover for the month of July)
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