Badlands, Inc. manufactures a household fan that sells for $20 per unit. All sal

Question

Badlands, Inc. manufactures a household fan that sells for $20 per unit. All sales are on account, with 30 percent of sales collected in the month of sale and 70 percent collected in the following month. The data that follow were extracted from the company's accounting records. Badlands maintains a minimum cash balance of $40,000. Total payments in January 20xl are budgeted at $180,000 A schedule of cash collections for January and February of 20x1 revealed the following receipts for the period: Cash Receipts January February From December 31 accounts receivable From January sales From February sales $112,000 77,000 $115,000 60,000 March 20x1 sales are expected to total 9,000 units. Finished-goods inventories are maintained at 25 percent of the following month's sales. The December 31, 20x0, balance sheet revealed the following selected figures: cash, $22,600; accounts receivable, S112,000; and finished goods, $22,500 Required I. Determine the number of units that Badlands sold in December 20x0 2. Compute the sales revenue for March 20x 3. Compute the total sales revenue to be reported on Badlands' budgeted income 4. 5. 6. 7. statement for the first quarter of 20x1 Determine the accounts receivable balance to be reported on the March 31, 20x1 budgeted balance sheet. Calculate the number of units in the December 31, 20x0, finished-goods inventory Calculate the number of units of finished goods to be manufactured in January 20x1 Calculate the financing required in January, if any, to maintain the firm's minimum cash balance. r sales sales revenue rst quarter sales revenue 31 accounts receivable balance nished goods to be manufactured in January inancing required in January

Explanation / Answer

1 December Sales =(112000*100/70)/20 8000 Units 2 Sales Revenue for March =9000*20 180000 3 First Quarter Sales Revenue January Sales =77000+115000 192000 February Sales =60000*100/30 200000 March Sales 180000 Total Sales Revenue Q1 572000 4 Accounts receivable balance as of March 31 180000*.70 126000 5 Calculate the number of units in the December 31, 20x0 finished goods inventory No of Units Sold in January 192000/20=9600 units December 31, 20x0 finished goods inventory =9600*25% 2400 6 Calculate the number of units of finished goods to be manufactured in January 20x1 No of Units Sold in Feb 200000/20=10000 units December 31, 20x0 finished goods inventory =10000*25% 2500 Let X = # of finished goods to be manufactured in January 2500+X-9600=2400 X=9500 7 Calculate the January required financing Cash balance, January 1 22600 Add January Collection 189000 Deduct: January payments 180000 Cash balance, January 31 31600 Desired minimum balance 40000 Required financing 8400

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