The Alec Corporation sells inflatable pools.On June 30,there were 105 pools in ending inventory,and accounts receivable had a balance of $12,000.Sales of inflatable pools (in units)have been budgeted at the following levels for the upcoming months:

The company has a policy that the ending inventory of inflatable pools should be equal to 30% of the number of pools to be sold in the following month.The Outdoor Leisure Store sells the inflatable pools for $100 each.The company's collection history shows that 30% of the sales in a month are paid for by customers in the month of sale,while the remainder is collected in the following month.
Required:
a.Prepare a merchandise purchases budget showing how many pools should be purchased in each of the months including July,August,and September.
b.Prepare a cash collections budget for each of the months including July,August,and September.

Question

The Alec Corporation sells inflatable pools.On June 30,there were 105 pools in ending inventory,and accounts receivable had a balance of $12,000.Sales of inflatable pools (in units)have been budgeted at the following levels for the upcoming months:
  
The company has a policy that the ending inventory of inflatable pools should be equal to 30% of the number of pools to be sold in the following month.The Outdoor Leisure Store sells the inflatable pools for $100 each.The company's collection history shows that 30% of the sales in a month are paid for by customers in the month of sale,while the remainder is collected in the following month.
Required:
a.Prepare a merchandise purchases budget showing how many pools should be purchased in each of the months including July,August,and September.
b.Prepare a cash collections budget for each of the months including July,August,and September.

Quizplus · Accepted Answer

The Answer of The Alec Corporation sells inflatable pools.On June 30,there were 105 pools in ending inventory,and accounts receivable had a balance of $12,000.Sales of inflatable pools (in units)have been budgeted at the following levels for the upcoming months:
  
The company has a policy that the ending inventory of inflatable pools should be equal to 30% of the number of pools to be sold in the following month.The Outdoor Leisure Store sells the inflatable pools for $100 each.The company's collection history shows that 30% of the sales in a month are paid for by customers in the month of sale,while the remainder is collected in the following month.
Required:
a.Prepare a merchandise purchases budget showing how many pools should be purchased in each of the months including July,August,and September.
b.Prepare a cash collections budget for each of the months including July,August,and September.

The Alec Corporation Sells Inflatable Pools