Streuling Enterprises_Budget

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Description

 

Q1. (15 marks) On March 31, Streuling Enterprises, a
merchandising firm, had an inventory of 38,000 units, and it had accounts
receivable totalling $85,000. Sales, in units, have been budgeted as follows
for the next four months:

April

60,000

May

75,000

June

90,000

July

81,000

Streuling’s board of directors has established a
policy to commence in April that the inventory at the end of each month should
contain 40% of the units required for the following month’s budgeted sales.

The selling price is $2 per unit. One-third of sales
are paid for by customers in the month of the sale; the balance is collected in
the following month.

Required:

a) Prepare a merchandise purchases budget showing how
many units should be purchased for each of the months April, May, and June. Remember
there is a difference between units and $of the units – use the right figures
in the right spots

b) Prepare a schedule of expected cash collections for
each of the months April, May, and June. Remember the existing A/R
balance

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