Mast Corporation seeks your assistance in developing cash andother budget information for May, June, and July. At April 30, thecompany had cash of $11,000, accounts receivable of $872,000,inventories of $130,800, and accounts payable of $38,087. Thebudget is to be based on the following assumptions.
- Each month’s sales are billed on the last day of themonth.
- Customers are allowed a 2 percent discount if payment is madewithin 10 days after the billing date. Receivables are recorded inthe accounts at their gross amounts (not net of discounts).
- The billings are collected as follows: 60 percent within thediscount period, 25 percent by the end of the month, and 12 percentby the end of the following month. Three percent isuncollectible.
Purchase data are as follows.
- Of all purchases of merchandise and selling, general, andadministrative expenses, 63 percent is paid in the month purchasedand the remainder in the following month.
- The number of units in each month’s ending inventory equals 120percent of the next month’s units of sales.
- The cost of each unit of inventory is $10.
- Selling, general, and administrative expenses, of which $4,000is depreciation, equal 20 percent of the current month’ssales.
- Actual and projected sales follow:
| Dollars | Units |
| March | $ | 177,000 | 11,800 |
| April | | 211,500 | 14,100 |
| May | | 163,500 | 10,900 |
| June | | 186,000 | 12,400 |
| July | | 165,000 | 11,000 |
| August | | 14,000 | 11,200 |
|
Required:
a. Compute the budgeted purchases in dollarsfor May.
b. Compute the budgeted purchases in dollars forJune.
c. Compute the budgeted cash collections duringMay. (Do not round intermediate calculations. Round yourfinal answer to nearest whole dollar.)
d. Compute the budgeted cash disbursements duringJune. (Do not round intermediate calculations.Round your final answer to nearest wholedollar.)
e. Compute the budgeted number of units ofinventory to be purchased during July.
