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8. Seasonal Products Corporation expects the following monthly sales: January ....... February... March ................ April... May ............. June... Total sales $168,000 $20,000 15,000 5,000 3,000 1,000 3,000 July.......... ............... August ....... September ... October. November............. December ............ $10,000 14,000 20,000 25,000 30,000 22,000 Sales are 20 percent for cash in a given month, with the remainder going into accounts receivable. All 80 percent of the credit sales are collected in the month 209 Chapter 6: Working Capital and the Financing Decision following the sale. Seasonal Products sells all of its goods for $2.00 each and produces them for $1.00 each. Seasonal Products uses level production, and average monthly production is equal to annual production divided by 12. a. Generate a monthly production and inventory schedule in units. Beginning Inventory in January is 5.000 units. (Note: To do part a, you should work in terms of units of production and units of sales.) b. Determine a cash receipts schedule for January through December. Assume dollar sales in the prior December were $15,000. Work using dollars. c. Determine a cash payments schedule for January through December. The production costs ($1 per unit produced) are paid for in the month in which they occur. Other cash payments, besides those for production costs, are $6,000 per month. d. Construct a cash budget for January through December. The beginning cash balance is $1,000, and that is also the required minimum. e. Determine total current assets for each month. (Note: Accounts receivable equal sales minus 20 percent of sales for a given month.)

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