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:

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.
b) Prepare a schedule of expected cash collections for each of the months April, May, and June.

Question

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:

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.
b) Prepare a schedule of expected cash collections for each of the months April, May, and June.

Quizplus · Accepted Answer

The Answer of 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:

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.
b) Prepare a schedule of expected cash collections for each of the months April, May, and June.

On March 31,Streuling Enterprises,a Merchandising Firm,had an Inventory of 38,000