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Q1) Carter Company has projected sales and production in units for second quarter of next year which are given below:

  April May June
Sales 60,000 40,000 50,000
Production 50,000 50,000 60,000


a. Cash production costs are budgeted at $6 per unit produced. Of these production costs, 40% are paid in month in which they are incurred and balance in the following month. Selling and administrative expenses (all of which are paid in cash) amount to $120,000 per month. Accounts payable balance on March 31 totals $192,000, all of which will be paid in April. Create a schedule for each month illustrating budgeted cash disbursements for Carter Company.

b. Suppose that all units will be sold on account for $15 each. Cash collections from sales are budgeted at 60% in month of sale, 30% in month following the month of sale, and remaining 10% in second month following month of sale. Accounts receivable on March 31 totaled $510,000 $(90,000 from February's sales and the remainder from March). Create a schedule for each month illustrating budgeted cash receipts for Carter Company.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M920472

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