Prepare a Financial Report by using the following Data:
1) The Alec Corporation sells inflatable pools. On June 30, there were 105 pools in ending inventory, and accounts receivable had a balance of $12,000. Sales of inflatable pools (in units) have been budgeted at the following levels for the upcoming months:
| Accounts receivable, June 30 |
$12,000 |
| Number of pools budgeted to be sold in July |
350 |
| Number of pools budgeted to be sold in August |
420 |
| Number of pools budgeted to be sold in September |
370 |
| Number of pools budgeted to be sold in October |
300 |
The company has a policy that the ending inventory of inflatable pools should be equal to 30% of the number of pools to be sold in the following month. The Outdoor Leisure Store sells the inflatable pools for $100 each. The company's collection history shows that 30% of the sales in a month are paid for by customers in the month of sale, while the remainder is collected in the following month.
Required:
a. Prepare a merchandise purchases budget showing how many pools should be purchased in each of the months including July, August, and September.
b. Prepare a cash collections budget for each of the months including July, August, and September.
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| Merchandise Purchases Budget |
July |
August |
September |
October |
| Budgeted unit sales |
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| Desired ending inventory (30% of next month's sales) |
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| Total needs |
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| Less beginning inventory |
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| Required purchases |
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| Part b. |
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| Cash Collections Budget |
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| Budgeted unit sales |
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| Selling price per unit |
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| Budgeted sales |
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| Accounts receivable, June 30 |
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| July sales |
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| August sales |
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| Ssplember sales |
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| Total cash collections |
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