The Elliot Corporation sells hammocks.On June 30,there were 70 hammocks in ending inventory and accounts receivable had a balance of $12,000.Sales of hammocks (in units)have been budgeted at the following levels for the upcoming months:

The company has a policy that the ending inventory of hammocks should be equal to 20% of the number of hammocks to be sold in the following month.The Outdoor Leisure Store sells the hammocks for $100 each.The company's collection history shows that 40% 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:
1.Prepare a merchandise purchases budget showing how many hammocks should be purchased in each of the months including July,August,and September.
2.Prepare a cash collections budget for each of the months including July,August,and September.

Question

The Elliot Corporation sells hammocks.On June 30,there were 70 hammocks in ending inventory and accounts receivable had a balance of $12,000.Sales of hammocks (in units)have been budgeted at the following levels for the upcoming months:
  
The company has a policy that the ending inventory of hammocks should be equal to 20% of the number of hammocks to be sold in the following month.The Outdoor Leisure Store sells the hammocks for $100 each.The company's collection history shows that 40% 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:
1.Prepare a merchandise purchases budget showing how many hammocks should be purchased in each of the months including July,August,and September.
2.Prepare a cash collections budget for each of the months including July,August,and September.

Quizplus · Accepted Answer

The Answer of The Elliot Corporation sells hammocks.On June 30,there were 70 hammocks in ending inventory and accounts receivable had a balance of $12,000.Sales of hammocks (in units)have been budgeted at the following levels for the upcoming months:
  
The company has a policy that the ending inventory of hammocks should be equal to 20% of the number of hammocks to be sold in the following month.The Outdoor Leisure Store sells the hammocks for $100 each.The company's collection history shows that 40% 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:
1.Prepare a merchandise purchases budget showing how many hammocks should be purchased in each of the months including July,August,and September.
2.Prepare a cash collections budget for each of the months including July,August,and September.

The Elliot Corporation Sells Hammocks