Problem:
On August 31, Blake & Sons had an inventory of 50 units of finished goods, and it had accounts receivable totaling $75,000. Sales, in units, have been budgeted as follows for the next four months:
September = 300
October = 400
Novemeber = 450
December = 500
Blake has a policy that 20% of the following month's sales should be maintained in ending inventory. Each unit sells for $500. All sales are on account. The budgeted cash collections anticipate that one half of sales will be collected in the month of sale and the other half in the following month.
A. Prepare a production budget for the months of September, October, and November.
B. Prepare a schedule of budgeted cash collections from sales for the months of September, October, and November.