Use the following to answer questions 24-25 The LaPann Company has obtained the

Question

Use the following to answer questions 24-25 The LaPann Company has obtained the following sales forecast data: July August September October $80,000 $70,000 $50,000 $60,000 Cash sales . Credit sales.. 240,000 $220,000 $180,000 $200,000 ection ofcre dit sales is 20% in the month of sale, 70% in the The regular pattern of coll month following the month of sale, and the remainder in the second month following the month of sale. There are no bad debts. 24. The budgeted accounts receivable balance on September 30 is: A) $126,000 B) $148,000 C) $166,000 D) $190,000 25. The budgeted cash receipts for October are: A) $188,000 B) $248,000 C) $226,000 D) $278,000 26. Pitkins Company collects 20% of a month's sales in the month of sale, 70% in the month following sale, and 6% in the second month following sale. The remainder is uncollectible. Budgeted sales for the next four months are: January February March April $250,000 Budgeted sales $200,000 $300,000 $350,000 Cash collections in April are budgeted to be: A) $321,000 B) $313,000 C) $320,000 D) $292,000 27. On January 1, Barnes Company has 8,000 units of Product A on hand. During the year, the company plans to sell 30,000 units of Product A, and plans to have 6,500 units on hand at year end. How many units of Product A must be produced during the year? A) 28,500 B) 31,500 C) 30,000 D) 36,500 Page 7 of 10

Explanation / Answer

25.

The budgeted accounts receivable balance on sep 30 = ($ 220,000 * 10%) + ($ 180,000 * 80%)

= $ 166,000

Therefore, Option C is correct.

26.

The budgeted cash receipts for october = $ 60,000 + ($ 200,000 * 20%) + ($ 180,000 * 70%) + ($ 220,000 * 10%)

= $ 248,000

Therefore, Option B is correct.

27.

Cash collections in April = ($ 300,000 * 6%) + ($ 350,000 * 70%) + ($ 250,000 * 20%)

= $ 313,000

Therefore, Option B is correct.

28.

Production during the year = $ 30,000 + $ 6,500 - $ 8,000 = $ 28,500

Therefore, Option A is correct.

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