Badlands, Inc. manufactures a household fan that sells for $40 per unit. All sal

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Badlands, Inc. manufactures a household fan that sells for $40 per unit. All sales are on account, with 35 percent of sales collected in the month of sale and 65 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 $21,000. Total payments in January 20x1 are budgeted at $225,000. •A schedule of cash collections for January and February of 20x1 revealed the following receipts for the period:

Badlands maintains a minimum cash balance of $21,000. Total payments in January 20x1 are budgeted at $225,000.

A schedule of cash collections for January and February of 20x1 revealed the following receipts for the period:

March 20x1 sales are expected to total 6,000 units.

Finished-goods inventories are maintained at 20 percent of the following month’s sales.

The December 31, 20x0, balance sheet revealed the following selected figures: cash, $23,700; accounts receivable, $130,000; and finished goods, $24,150.

Required:

Determine the number of units that Badlands sold in December 20x0.

Compute the sales revenue for March 20x1.

Compute the total sales revenue to be reported on Badlands’ budgeted income 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.

Badlands maintains a minimum cash balance of $21,000. Total payments in January 20x1 are budgeted at $225,000.

A schedule of cash collections for January and February of 20x1 revealed the following receipts for the period:

March 20x1 sales are expected to total 6,000 units.

Finished-goods inventories are maintained at 20 percent of the following month’s sales.

The December 31, 20x0, balance sheet revealed the following selected figures: cash, $23,700; accounts receivable, $130,000; and finished goods, $24,150.

Required:

Determine the number of units that Badlands sold in December 20x0.

Compute the sales revenue for March 20x1.

Compute the total sales revenue to be reported on Badlands’ budgeted income 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.

Badlands maintains a minimum cash balance of $21,000. Total payments in January 20x1 are budgeted at $225,000.

A schedule of cash collections for January and February of 20x1 revealed the following receipts for the period:

March 20x1 sales are expected to total 6,000 units.

Finished-goods inventories are maintained at 20 percent of the following month’s sales.

The December 31, 20x0, balance sheet revealed the following selected figures: cash, $23,700; accounts receivable, $130,000; and finished goods, $24,150.

Required:

Determine the number of units that Badlands sold in December 20x0.

Compute the sales revenue for March 20x1.

Compute the total sales revenue to be reported on Badlands’ budgeted income 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.

Q1) December Sales

Q2) March sales revenue

Q3) first quarter sales revenue

Q6) finished goods to be manufactured in January

Cash Receipts January February From December 31 accounts receivable $ 130,000 From January sales 88,000 $ 160,000 From February sales 74,900

Explanation / Answer

7. Financing required in January: $4300

1 December sales: 5000 units December sales revenue = $130000/65% = $200000 Number of units sold = $200000/$40 = 5000 2 March sales revenue = 6000 units x $40 = $240000 3 Total sales revenue for first quarter of 20x1: $702000 January sales revenue = $88000 + $160000 = $248000 February sales revenue = $74900/35% = $214000 March sales revenue = $240000 Total sales revenue for first quarter of 20x1 = $248000 + $214000 + $240000 = $702000 4 Accounts receivable balance on March 31 = $240000 x 65% = $156000 5 Finished goods inventory on December 31, 20x0: 1240 units January sales = $248000/$40 = 6200 units Ending inventory for December = 20% x 6200 units = 1240 6 Finished goods to be manufactured in January: 6030 units Units to be manufactured = Sales + Desired ending inventory - Beginning inventory = 6200 + 1070 - 1240 = 6030 Desired ending inventory = 20% of February sales = 20% x ($214000/$40) = 20% x 5350 = 1070

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