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Q1. (15 marks) On March 31, Streuling Enterprises, a merchandising firm, had an inventory of 38,000 units, and it had accounts receivable totalling $85,000. Sales, in units, have been budgeted as follows for the next four months: April 60,000 May 75,000 June 90,000 July 81,000 Streuling’s board of directors has established a policy to commence in April that the inventory at the end of each month should contain 40% of the units required for the following month’s budgeted sales. The selling price is $2 per unit. One-third of sales are paid for by customers in the month of the sale; the balance is collected in the following month. Required: a) Prepare a merchandise purchases budget showing how many units should be purchased for each of the months April, May, and June. Remember there is a difference between units and $of the units – use the right figures in the right spots b) Prepare a schedule of expected cash collections for each of the months April, May, and June. Remember the existing A/R balance

Q1. (15 marks) On March 31, Streuling Enterprises, a merchandising firm, had an inventory of 38,000 units, and it had accounts receivable totalling $85,000. Sales, in units, have been budgeted as follows for the next four months:

 

April 60,000
May 75,000
June 90,000
July 81,000

Streuling’s board of directors has established a policy to commence in April that the inventory at the end of each month should contain 40% of the units required for the following month’s budgeted sales.

 

The selling price is $2 per unit. One-third of sales are paid for by customers in the month of the sale; the balance is collected in the following month.

 

Required:

a) Prepare a merchandise purchases budget showing how many units should be purchased for each of the months April, May, and June. Remember there is a difference between units and $of the units – use the right figures in the right spots

b) Prepare a schedule of expected cash collections for each of the months April, May, and June. Remember the existing A/R balance

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