Question 34 (a) SHOW ANSWER LINK TO TEXT (b) SHOW ANSWER LINK TO TEXT (c) SHOW A
ID: 2438604 • Letter: Q
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Question 34
(a)
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(b)
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(c)
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(d)
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(e)
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(f)
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(g)
Question 34
The controller of Harrington Company estimates sales and production for the first four months of 2016 as follows:January February March April Sales $30,200 $42,900 $54,800 $27,800 Production in units 1,030 1,550 2,170 2,590
Sales are 40% cash and 60% on account, and 60% of credit sales are collected in the month of the sale. In the month after the sale, 40% of credit sales are collected. It takes 4 kg of direct material to produce a finished unit, and direct materials cost $5 per kg. All direct materials purchases are on account, and are paid as follows: 40% in the month of the purchase, 60% the following month. Ending direct materials inventory for each month is 40% of the next month’s production needs.
January’s beginning materials inventory is 1,648 kg. Suppose that both accounts receivable and accounts payable are zero at the beginning of January.
Answer the following questions:
(a)
What are the total cash sales for the January–March quarter?Total cash sales $
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What is the accounts receivable balance at the end of March?Accounts receivable balance $
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What is direct materials inventory balance at the end of March?Direct materials inventory balance kg
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What are material purchases costs for February?Material purchases for February $
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Your answer is correct. What are cash payments on account for February? (Round answer to 0 decimal places, e.g. 125.)Cash payments on account $
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Your answer is correct. What is the ending balance in accounts payable for March? (Round answer to 0 decimal places, e.g. 125.)Ending balance in accounts payable
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Attempts: 1 of 2 used(g)
Your answer is correct. What is the cash balance for the period January–March? (Round answer to 0 decimal places, e.g. 125.)Cash balance $
Explanation / Answer
A) TOTAL CASH SALES FOR JAN-MAR 1648 AMOUNT IN $ JAN FEB MAR SALES (IN $) 30200 42900 54800 CASH SALES ARE 40% OF TOTAL SALES 12080 17160 21920 EACH MONTH SALE*40% TOTAL CASH SALE IN $ 51160 B) ACCOUNTS RECEIVABLE BALANCE AT THE END OF MAR MARCH SALE 54800 ON ACCOUNT SALES 60% 32880 LESS: COLLECTED IN SAME MONTH 60% -19728 BALANCE ACCOUNT RECEIVABLE $ 13152 C) DIRECT MATERIAL INVENTORY BALANCE AT THE END OF MAR APRIL QTY PRODUCTION*MATERIAL QTY PER UNIT NEXT MONTH PRODUCTION NEEDS 2590*4 10360 DIRECT MATERIAL INVENTORY BALANCE QTY * 40% 4144 KG D) MATERIAL PURCHASE COSTS FOR FEBRUARY MATERAIL COST PRODUCTION UNITS*MATERIAL PER UNIT*PRICE OF MATERIAL PER UNIT 1550*4*5 $ 31000 E) CASH PAYMENTS ON ACCOUNT OF FEBRUARY JAN FEB MAR APRIL MATERIAL COSTS 20600 31000 43400 51800 CASH RECEIVED IN THE MONTH OF PUR 40% 8240 12400 17360 20720 60 % FOLLOWING MONTH 12360 18600 26040 $ 24760 F) ENDING BALANCE IN ACCOUNT PAYABLE FOR MARCH 60% OF MARCH MATERIAL COSTS 43400*60% $ 26040 G) CASH BALANCE FOR JAN-MAR JAN FEB MAR CASH 40 % 12080 17160 21920 CASH 60 10872 15444 19728 CASH 40 NEXT MONTH 7248 10296 LESS:PAYMENTS -8240 -12400 -17360 -12360 -18600 14712 15092 15984 $ 45788
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