You have been asked to prepare the monthly cash budget for June and July for the Merchandise and Mercantile Company. The company sells a unique product that is specially made for it by a major product manufacturer. The selling price is $23.00 per unit. All sales are on account. Merchandise purchases are also on account. The policy of the company is to purchase sufficient quantity of product to ensure that each month's ending inventory is 50% of the following month's expected sales quantity. The assignment file contains extracts from the general journal showing the journal entries pertaining to certain relevant transactions that have occurred and a set of entries the bookkeeper has provided that indicate the transactions expected to occur affecting cash, accounts payable, accounts receivable, and merchandise inventory accounts due to the projected sales revenues and projected merchandise purchases on the master budget. This analysis, with other additional data, is shown below. Assume today is May 31, 20X1, and that all dollar amounts are in thousands of dollars. Information From Accounting Records and Planning Documents Dr Cr May 31 4,050 April 30 39,000 19,110 Extracts From the May 31 Adjusted Trial Balance Cash 4,200 Merchandise inventory 9,400 Accounts receivable 28,600 Accounts payable Extracts From the General Journal Accounts receivable, April sales 39,000 Revenue Cash 19,110 Accounts receivable, April sales Bad debt expense, percentage of April sales 1,560 Allowance for doubtful accounts Accounts receivable, May sales 78,200 Revenue Cash 53,918 Accounts receivable, April sales Accounts receivable, May sales Merchandise inventory 16,200 Accounts payable, May purchases Accounts payable, May purchases 12,150 Cash, payment May purchases Projected Entries to the General Journal for Selected Anticipated Transactions as per Master Budget 1,560 May 31 78,200 15,600 38,318 16,200 12,150 June 30 108,100 18,800 108,100 18,800 4,050 4,050 2,730 2,730 July 31 Accounts receivable, June sales Revenue Cost of sales for June Inventory Accounts payable, May purchases Cash, May purchases Cash Accounts receivable, April sales Accounts receivable, July sales Sales revenue Accounts receivable, August sales Sales revenue Period fixed expenses, August Accumulated depreciation, August Cash Variable operating expenses (percent of sales) Cash 83,030 83,030 August 31 106,030 106,030 2,350 675 1,675 10,603 10,603 Required: 1. Calculate the cost per unit of merchandise inventory. Cost per unit 2. Prepare a schedule showing the quantity of sales, ending inventory, beginning inventory and the quantity of product purchased in May, June, and July. May June July Sales Ending inventory Beginning inventory Purchases Cost 3. Use the price per unit of inventory purchased and the quantity purchased to determine the expenditure for purchases in May, June, and July. May June July Cost of purchases 4. Calculate the percentages of sales the company expects to collect in the month of the sale and in the two months following the sale. What is the percentage of uncollectible sales? Assume that the percentages calculated for the month for which data is provided also apply to sales for any month of the year. % collected in April % collected in May % collected in June % uncollectible Total 100% 5. Calculate the percentages of May and June merchandise purchases the company expects to pay in June. May June Merchandise purchases 6. Calculate the balance in the accounts receivable on June 30. Assume all receivables are due to sales on account. Balance 7. Calculate the balance in the cash account on June 30, based on the transactions projected to occur in June. Use the collection and disbursement percentages previously calculated. Assume that fixed expenses occur evenly in each month of the year. Balance 8. Prepare a cash budget for July, in good form. Use the collection and disbursement percentages previously calculated. (Amounts to be deducted should be indicated by a minus sign.) Cash budget for July Cash Budget Month Ended July 31, 20XX July cash collections: July cash disbursements for merchandise purchases: Selling and administration expenses: You have been asked to prepare the monthly cash budget for June and July for the Merchandise and Mercantile Company. The company sells a unique product that is specially made for it by a major product manufacturer. The selling price is $23.00 per unit. All sales are on account. Merchandise purchases are also on account. The policy of the company is to purchase sufficient quantity of product to ensure that each month's ending inventory is 50% of the following month's expected sales quantity. The assignment file contains extracts from the general journal showing the journal entries pertaining to certain relevant transactions that have occurred and a set of entries the bookkeeper has provided that indicate the transactions expected to occur affecting cash, accounts payable, accounts receivable, and merchandise inventory accounts due to the projected sales revenues and projected merchandise purchases on the master budget. This analysis, with other additional data, is shown below. Assume today is May 31, 20X1, and that all dollar amounts are in thousands of dollars. Information From Accounting Records and Planning Documents Dr Cr May 31 4,050 April 30 39,000 19,110 Extracts From the May 31 Adjusted Trial Balance Cash 4,200 Merchandise inventory 9,400 Accounts receivable 28,600 Accounts payable Extracts From the General Journal Accounts receivable, April sales 39,000 Revenue Cash 19,110 Accounts receivable, April sales Bad debt expense, percentage of April sales 1,560 Allowance for doubtful accounts Accounts receivable, May sales 78,200 Revenue Cash 53,918 Accounts receivable, April sales Accounts receivable, May sales Merchandise inventory 16,200 Accounts payable, May purchases Accounts payable, May purchases 12,150 Cash, payment May purchases Projected Entries to the General Journal for Selected Anticipated Transactions as per Master Budget 1,560 May 31 78,200 15,600 38,318 16,200 12,150 June 30 108,100 18,800 108,100 18,800 4,050 4,050 2,730 2,730 July 31 Accounts receivable, June sales Revenue Cost of sales for June Inventory Accounts payable, May purchases Cash, May purchases Cash Accounts receivable, April sales Accounts receivable, July sales Sales revenue Accounts receivable, August sales Sales revenue Period fixed expenses, August Accumulated depreciation, August Cash Variable operating expenses (percent of sales) Cash 83,030 83,030 August 31 106,030 106,030 2,350 675 1,675 10,603 10,603 Required: 1. Calculate the cost per unit of merchandise inventory. Cost per unit 2. Prepare a schedule showing the quantity of sales, ending inventory, beginning inventory and the quantity of product purchased in May, June, and July. May June July Sales Ending inventory Beginning inventory Purchases Cost 3. Use the price per unit of inventory purchased and the quantity purchased to determine the expenditure for purchases in May, June, and July. May June July Cost of purchases 4. Calculate the percentages of sales the company expects to collect in the month of the sale and in the two months following the sale. What is the percentage of uncollectible sales? Assume that the percentages calculated for the month for which data is provided also apply to sales for any month of the year. % collected in April % collected in May % collected in June % uncollectible Total 100% 5. Calculate the percentages of May and June merchandise purchases the company expects to pay in June. May June Merchandise purchases 6. Calculate the balance in the accounts receivable on June 30. Assume all receivables are due to sales on account. Balance 7. Calculate the balance in the cash account on June 30, based on the transactions projected to occur in June. Use the collection and disbursement percentages previously calculated. Assume that fixed expenses occur evenly in each month of the year. Balance 8. Prepare a cash budget for July, in good form. Use the collection and disbursement percentages previously calculated. (Amounts to be deducted should be indicated by a minus sign.) Cash budget for July Cash Budget Month Ended July 31, 20XX July cash collections: July cash disbursements for merchandise purchases: Selling and administration expenses