You have been asked to prepare the monthly cash budget for June and July for the

Question

You have been asked to prepare the monthly cash budget for June and July for the Merchandise and Mercantile Company. The company sells a unique product that is specially made for it by a major product manufacturer. The selling price is $24.00 per unit. All sales are on account.

Merchandise purchases are also on account. The policy of the company is to purchase sufficient quantity of product to ensure that each month’s ending inventory is 50% of the following month’s expected sales quantity.

The assignment file contains extracts from the general journal showing the journal entries pertaining to certain relevant transactions that have occurred and a set of entries the bookkeeper has provided that indicate the transactions expected to occur affecting cash, accounts payable, accounts receivable, and merchandise inventory accounts due to the projected sales revenues and projected merchandise purchases on the master budget. This analysis, with other additional data, is shown below. Assume today is May 31, 20X1, and that all dollar amounts are in thousands of dollars.

Information From Accounting Records and Planning Documents
Dr Cr
Extracts From the May 31 Adjusted Trial Balance
   May 31 Cash 4,300   
Merchandise inventory 9,600   
Accounts receivable 28,800   
Accounts payable 4,125   
Extracts From the General Journal
   April 30 Accounts receivable, April sales 40,000   
       Revenue 40,000   
Cash 19,600   
       Accounts receivable, April sales 19,600   
Bad debt expense, percentage of April sales 1,600   
       Allowance for doubtful accounts 1,600   
   May 31 Accounts receivable, May sales 82,800   
       Revenue 82,800   
Cash 56,572   
       Accounts receivable, April sales 16,000   
       Accounts receivable, May sales 40,572   
Merchandise inventory 16,500   
       Accounts payable, May purchases 16,500   
Accounts payable, May purchases 12,375   
       Cash, payment May purchases 12,375   
Projected Entries to the General Journal for Selected
Anticipated Transactions as per Master Budget
   June 30 Accounts receivable, June sales 115,200   
       Revenue 115,200   
Cost of sales for June 19,200   
       Inventory 19,200   
Accounts payable, May purchases 4,125   
       Cash, May purchases 4,125   
Cash 2,800   
       Accounts receivable, April sales 2,800   
July 31 Accounts receivable, July sales 86,880   
       Sales revenue 86,880   
August 31 Accounts receivable, August sales 110,880   
       Sales revenue 110,880   
Period fixed expenses, August 2,400   
       Accumulated depreciation, August 700   
       Cash 1,700   
Variable operating expenses (percent of sales) 11,088   
       Cash 11,088

l College )Con x Connect RegistrationDer x Chapter x Sign Up Course Hero ezto.mheducation.com/hm.tpx You have been asked to prepare the monthly cash budget for June and July for the Merchandise and Mercantile Company The company sells a unique product that is specially made for it by a major product manufacturer. The selling price is $24 00 per unit. All sales are on account Merchandise purchases are also on account. The policy of the company is to purchase sufficient quantity of product to ensure that each month's ending inventory is 50% of the following month's expected sales quantity The assignment file contains extracts from the general journal showing the journal entries pertaining to certain relevant transactions that have occurred and a set of entries the bookkeeper has provided that indicate the transactions expected to occur affecting cash, accounts payable, accounts receivable, and merchandise inventory accounts due to the projected sales revenues and projected merchandise purchases on the master budget This analysis, with other additional data, is shown below Assume today is May 31 20X1, and that all dollar amounts are in thousands of dollars Information From Accounting Records and Planning Documents Dr Cr Extracts From the May 31 Adjusted Trial Balance Cash Merchandise inventory Accounts receivable Accounts payable May 31 4,300 9,600 28,800 4,125 Extracts From the General Journal April 30 Accounts receivable, April sales Cash Bad debt expense, percentage of April sales Accounts receivable, May sales Cash 40,000 19,600 1,600 82 800 Revenue 40,000 19,600 1,600 82,800 16,000 Accounts receivable. April sales Allowance for doubtful accounts May 31 Revenue Accounts receivable, April sales Accounts receivable, May sales 40 572 16,500 2,375 Merchandise inventory 16,500 Accounts payable, May purchases Accounts payable, May purchases 12,375 Cash, payment May purchases Projected Entries to the General Journal for Selected Anticipated Transactions as per Master Budget 115,200 19,200 4,125 2800 86,880 110,880 2400 June 30 Accounts receivable, June sales 115,200 19,200 4.125 2.800 86,880 110,880 700 evenue Cost of sales for June Inventory Accounts payable, May purchases Cash, May purchases Cash Accounts receivable, April sales July 31 Accounts receivable, July sales Sales revenue Sales revenue Accumulated depreciation, August August 31 Accounts receivable, August sales Period fixed expenses, August 1700 Cash 11088 Variable operating expenses (percent of sales) 11,088 Cash

Explanation / Answer

Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you. As per chegg policy, if question have more than 4 sub parts, please post it seperately 1. Calculate the cost per unit of merchandise inventory. June Sale Value ($) 115200 Selling Price per Unit ($) 24 Hence Units Sold (115200/24) 4800 Cost of Sales for June 19200 Hence Cost per unit of Merchandise Inventory 4 19200/4800 2. Schedule of Sales/Inventory Working May June July Aug May June July Aug Expected units to be sold 3450 4800 3620 4620 82800/24 115200/24 86880/24 110880/24 add: desired ending inventory 2400 1810 2310 50% of Next Month Sale Total Units available for sale 5850 6610 5930 Less: Beginning invenory -1725 -2400 -1810 3450*50% Product Purchased 4125 4210 4120 3. Expenditure for Purchase Product Purchased 4125 4210 4120 Cost per Unit of Purchase 4 4 4 Expenditure for Purchase 16500 16840 16480 4. Collection Percentage April Sale Value ($) 40000 A Collected in April 19600 B Bad Debt in April 1600 C Collected in May 16000 D Collected in June 2800 E % of Collection in Same Month 19600/40000 49.0% % of Collection in Next Month 16000/40000 40.0% % of Collection in Next to Next Month 2800/40000 7.0% % Uncollectible 1600/40000 4.0% 5. Calculate the percentages of May and June merchandise purchases the company expects to pay in June. May June Merchandise Purchases 16500 16840 Payment in May 12375 Payment in June 4125 % of Payment in June For May Purchase 4125/16500 25% For June Purchase 12375/16500 75% 6. Receivable Balance as on Jun 30 Since 100% sales is collected in three months, on June 30th, part of May and June Sale will be oustanding Collection in Total Sale April May June Bad Debt Balance April Sale 40000 19600 16000 2800 1600 0 May Sale 82800 40572 33120 3312 5796 June Sale 115200 56448 4608 54144 Balance of Receivable 59940

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