Question

Tilson Corporation has projected sales and production in units for the second quarter of the coming year as follows: April May June Sales 61,000 51,000 71,000 Production 71,000 61,000 61,000 Cash-related production costs are budgeted at $6 per unit produced. Of these production costs, 50% 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 $190,000, 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, 25% in the month following the month of sale, and the remaining 15% in the second month following the month of sale. Accounts receivable on April 1 totaled $586,000 ($106,000 from February's sales and $480,000 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.

Answer 1

Schedule of cash disbursements
	April	May	June
Sales Units	61,000	51,000	71,000
Production Units	71,000	61,000	61,000
Cash production costs	426,000	366,000	366,000
50% in same month	213,000	183,000	183,000
Balance	190,000	213,000	183,000
Selling and Admin expense	60,000	60,000	60,000
Budgeted cash payments	463,000	456,000	426,000
Cash Receipts Schedule
	April	May	June
Sales	915,000	765,000	1,065,000
60% in the month of sale	549,000	459,000	639,000
25% in following month	300,000	228,750	191,250
15% in second month	106,000	180,000	137,250
Budgeted collections	955,000	867,750	967,500