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Mushrif Company has projected sales and production in units for the second quarter of 2017...

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Question

Accounting

Mushrif Company has projected sales and production in units for the second quarter of 2017 as follows

Particular

April

May

June

Sales

35,000

25,000

30,000

Production

30,000

25,000

40,000

Cash production costs are budgeted at SAR 7 per unit produced. Of these production costs, 30% are paid in the month in which they are incurred and the balance in the following month. Selling and administrative expenses (all paid in cash) amount to SAR 70,000 per month. The accounts payable balance on March 31 totals SAR 100,000, all of which will be paid in April.

Assume that all units will be sold on account for SAR 20 each. Cash collections from sales are budgeted at 70% in the month of sale, 20% in the month following the month of sale and the remaining 10% in the second month following the month of sale. Accounts receivable on March 31 totaled SAR 300,000.

Required

A. Prepare a schedule for each month showing budgeted cash disbursements for Mushrif Company. [1.5 Marks]

B. Prepare a schedule for each month showing budgeted cash receipts for Mushrif Company.

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