Help Save & Exit You have just been hired as a new management trainee by E in sh

Question

Help Save & Exit You have just been hired as a new management trainee by E in shopping malls across the country. In the past, the company has done year has experienced a shortage of cash. Since you are wel the upcoming second quarter. To this end, you have worked with accounting and other areas to gather the information assembled below The company sells many styles of earrings, but all are sold for the same price-$17 per pair. Actual sales of earrings for the last three months and budgeted sales for the next six months follow (n pairs of earrings) arrings Unlimited, a distributor of earrings to various retail outlets located ry little in the way of budgetin and at certain times of the I trained in budgeting. you have decided to prepare a master budget for January (actual) 23,600 June (budget) 53,600 February (actual) 29,600 July (budget) 33,6e0 March (actual) 43,600 August (budget) 31,680 April (budget) 68,600 September (budget) 28,60e May (budget) 103,600 The concentration of sales before and during May is due to Mother's Day Sufficient inventory should be on hand at the end of each to supply 40% of the earrings sold in the following month. Suppliers are paid $5.80 for a pair of earrings. One-half of a month's purchases is paid for in the month of purchase;, the other haif is month. All sales are on credit Only 20% of a month's sales are collected in the month of sale. An additional paid for in the following 70% is collected in the following month, and negligible Monthly operating expenses for the company are given below the remaining 10% is collected in the second month following sale Bad debts have been Variable: Prev 2of 2 e to search

Explanation / Answer

As per policy, only four parts of a question is allowed to answer at a time, so answering 1a to 1d :

1a)   Sales budget for quarter: April May June Total Budgeted Sales units 68600 103600 53600 225800 Selling price per unit $17 $17 $17 $17 Total Sales $1,166,200 $1,761,200 $911,200 $3,838,600 1b) Schedule of expected cash collections: April May June Total expected sales $1,166,200 $1,761,200 $911,200 for feb 29600*17*0.1=50320 50320 for mar 43600*17*0.7=518840 43600*17*0.1=74120 592960 for apr $233,240.0 $816,340.0 $116,620.0 $1,166,200.0 for may $352,240.0 $1,232,840.0 $1,585,080.0 for june $182,240.0 $182,240.0 Total Monthly 802400 1242700 $1,531,700.0 3576800 1c) Merchandise purchase budget : April May June Total sales units 68600 103600 53600 225800 add: expected closing units 41440 21440 13440 13440 Total required 110040 125040 67040 239240 Less: opening units 27440 41440 21440 27440 Purchases required 82600 83600 45600 211800 Puchase price 5.8 5.8 5.8 5.8 Total purchase amount 479080 484880 264480 1228440 1d) Schedule of expected cash disbursements for purchases: April May June Total Total purchase amount 479080 484880 264480 for mar 118000 118000 for apr 239540 239540 479080 for may 242440 242440 484880 for jun 132240 132240 Total monthly 357540 481980 374680 1214200

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