Question

Shawn, Inc. makes Lego figures. The budget reports Shawn plans on selling 15 figures in November, 20 in December, and 5 in January – all on credit. Each figure sells for $20 and costs Shawn $5. Shawn receives 50% of the current month’s sells during the current month and 50% in the following month. Shawn pays 100% of his costs in the current month. Shawn makes sure he has 40% of next month’s sales available in inventory at the end of the current month. Based on this, Shawn begins November with 6 figures already made.

1. How much cash will Shawn receive from customers in December?

2. How much cash will Shawn receive from customers in January?

3. How much will Shawn's cash account change in December?

Answer 1

Please give positive ratings so I can keep answering. It would help me a lot. Please comment if you have any query. Thanks!

Shawn, Inc.	November	December	January	Note
Sales (Units)	15.00	20.00	5.00	A
Sell price	20.00	20.00	20.00	B
Budgeted Sales Revenue	300.00	400.00	100.00	C=A*B
Answer 1	December
50% of Decmeber sales	200.00
50% of Novmeber sales	150.00
Cash receiveed from customers in December	350.00
Answer 2	January
50% of January sales	200.00
50% of Decmeber sales	50.00
Cash receiveed from customers in January	250.00
Workings for Answer 3	December
Sales (Units)	20.00
Add: Closing inventory (40% of sales of Januray)	2.00
Less: Opening inventory (40% of sales of December)	8.00
Purchase Budget (Units)	14.00
Unit price	5.00
Purchase cost	70.00
Answer 3	December
Cash receiveed from customers in December	350.00
Less: Purchase cost	70.00
Cash account change in December	280.00