Question

In: Accounting

TB Problem Qu. 8-217 Tilson Corporation has projected sales and ... Tilson Corporation has projected sales...

TB Problem Qu. 8-217 Tilson Corporation has projected sales and ...

Tilson Corporation has projected sales and production in units for the second quarter of the coming year as follows:

April May June
Sales 49,000 39,000 59,000
Production 59,000 49,000 49,000

Cash-related production costs are budgeted at $6 per unit produced. Of these production costs, 40% are paid in the month in which they are incurred and the balance in the following month. Selling and administrative expenses will amount to $60,000 per month. The accounts payable balance on March 31 totals $178,000, which will be paid in April.

All units are sold on account for $15 each. Cash collections from sales are budgeted at 60% in the month of sale, 30% in the month following the month of sale, and the remaining 10% in the second month following the month of sale. Accounts receivable on April 1 totaled $477,000 ($97,000 from February's sales and $380,000 from March’s sales).

Required:

a. Prepare a schedule for each month showing budgeted cash disbursements for Tilson Corporation.

b. Prepare a schedule for each month showing budgeted cash receipts for Tilson Corporation.

Solutions

Expert Solution

Req 1 Schedule for each month showing budgeted cash disbursement for Tilson Corporation
April May June
Production Cost    354,000    294,000    294,000
Cash Disbursement
Production cost this month (40%)    141,600    117,600    117,600
Production cost prior month (60%)    178,000    212,400    176,400
Selling and administrative      60,000      60,000      60,000
Total Disbursement    379,600    390,000    354,000
Req 2 April May June
Total SALES    735,000    585,000    885,000
Cash Receipts:
February Sales      97,000
March SALES    380,000
April Sales    441,000    220,500      73,500
May Sales    351,000    175,500
June Sales    531,000
Total Receipts    918,000    571,500    780,000
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