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Q1.ABC Company has projected sales and production in units for the second quarter of 2017...

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Question

Accounting

Q1.ABC Company has projected sales and production in units for the second quarter of 2017 as follows (3 marks)

Particular

April

May

 June
Sales 35,000 25,000 30,000

Production

 30,000 25,000 40,000

Cash production costs are budgeted at SR 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 SR 70,000 per month. The accounts payable balance on March 31 totals $100,000, all of which will be paid in April.

Assume that all units will be sold on account for SR 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 SR 300,000 (SR50, 000 from February's sales and the remainder from March.)

Required

A. Prepare a schedule for each month showing budgeted cash disbursements for ABC Company.

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

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