Question

 

Schedule of Cash Collections of Accounts Receivable

OfficeMart Inc. has "cash and carry" customers and credit customers. OfficeMart estimates that 30% of monthly sales are to cash customers, while the remaining sales are to credit customers. Of the credit customers, 20% pay their accounts in the month of sale, while the remaining 80% pay their accounts in the month following the month of sale. Projected sales for the next three months are as follows:

October	$114,000
November	143,000
December	209,000

The Accounts Receivable balance on September 30 was $76,000.

Prepare a schedule of cash collections from sales for October, November, and December. Round all calculations to the nearest whole dollar.

OfficeMart Inc.
Schedule of Cash Collections from Sales
For the Three Months Ending December 31
	October	November	December
Receipts from cash sales:
Cash sales	$	$	$
September sales on account:
Collected in October
October sales on account:
Collected in October
Collected in November
November sales on account:
Collected in November
Collected in December
December sales on account:
Collected in December
Total cash receipts	$	$	$

Ace Racket Company manufactures two types of tennis rackets, the Junior and Pro Striker models. The production budget for July for the two rackets is as follows:

	Junior	Pro Striker
Production budget	9,600 units	22,100 units

Both rackets are produced in two departments, Forming and Assembly. The direct labor hours required for each racket are estimated as follows:

	Forming Department	Assembly Department
Junior	0.25 hour per unit	0.5 hour per unit
Pro Striker	0.35 hour per unit	0.6 hour per unit

The direct labor rate for each department is as follows:

Forming Department	$14 per hour
Assembly Department	$12 per hour

Prepare the direct labor cost budget for July.

Ace Racket Company
Direct Labor Cost Budget
For the Month Ending July 31
	Forming Department	Assembly Department
Hours required for production:
Junior
Pro Striker
Total
Hourly rate	x$	x$
Total direct labor cost	$	$

Answer 1

Solution 1:

OfficeMart Inc.
Schedule of Cash Collections from Sales
For the Three Months Ending December 31
	October	November	December
Receipts from cash sales:
Cash sales	$34,200.00	$42,900.00	$62,700.00
September sales on account:
Collected in October	$76,000.00
October sales on account:
Collected in October	$15,960.00
Collected in November		$63,840.00
November sales on account:
Collected in November		$20,020.00
Collected in December			$80,080.00
December sales on account:
Collected in December			$29,260.00
Total cash receipts	$126,160.00	$126,760.00	$172,040.00

Solution 2:

Ace Racket Company
Direct Labor Cost Budget
For the Month Ending July 31
	Forming Department	Assembly Department
Hours required for production:
Junior	2400	4800
Pro Striker	7735	13260
Total	10135	18060
Hourly rate	$14.00	$12.00
Total direct labor cost	$141,890.00	$216,720.00