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Q1) Carter Company has projected sales and production in units for second quarter of next year as follows:

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

Required:

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 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 the second month following the month of sale. Accounts receivable on March 31 totaled $510,000 $(90,000 from February's sales and  remainder from March). Create schedule for each month illustrating budgeted cash receipts for Carter Company.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M921408

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