1. Renson Corporation, a wholesaler, provided you with the following information:
|
Month
|
Merchandise Purchases
|
Sales
|
|
January
|
$ 142,000
|
$ 172,000
|
|
February
|
148,000
|
166,000
|
|
March
|
136,000
|
165,000
|
|
April
|
154,000
|
178,000
|
|
May
|
160,000
|
166,000
|
Renson's expected pattern of cash collections:
60% - collected in the month of the sale
30% - collected in the month after the sale
10% - collected in the second month after the sale
Renson pays all of its invoices in the month following the purchase and takes advantage of all available early payment discounts.
Available discount for early payment - 3%
Remson's expected payments in May for operating expenses - $119,000
Remson's actual cash balance on May 1 - $127,000
Required:
A. Prepare a schedule to compute expected cash collections for the month of May.
B. Prepare a schedule to compute expected cash payments for the month of May.
C. Prepare a schedule to the compute expected balance on May 31.
2. Santori Corporation has recently experienced a number of out-of-stock situations because of inadequate inventory levels. Here in information about their inventory levels and their budgeted sales:
|
Month
|
Ending Inventory (units)
|
Budgeted Sales (units)
|
|
May
|
50
|
|
|
June
|
|
5,000
|
|
July
|
|
5,600
|
|
August
|
|
5,500
|
Inventory Policy: Ending inventory each month as percent of next month's sales: 20%.
Required: Determine the number of units that Santori must produce during the month of June, and the number of units Santori must produce during the month of July, in order to maintain the desired inventory levels at the end of each of those two months.