1) NanoTech is developing cash and other budget information for May, June and July. On April 30, the company had cash of $10,000 accounts receivable of $75,000, and accounts payable of $100,000. The budget is to be based on the following assumptions.

  • Each month’s sales are billed on the last day of the month.
  • The billing is collected as follows: 70% within the discount period, 15% by the end of the month, 10 % by the end of second month. The rest is uncollectable.
  • Customer are allowed 2% discount if payment is made within 10 days after billing date. Receivables are recorded in the accounts at their gross amounts. (not net of discounts)
  • The cost of each unit of inventory is $3.
  • Of all purchases of merchandise and selling, general, and administrative expenses 60% is paid in the month purchased and the remainder in the following month.
  • The number of units in each months ending inventory equals 110% of next month’s units sales.
  • Selling, general, and administrative expenses, of which $5,000 is depreciation, equal 20% of current month’s sales. Actual sales for March and April and projected sales for May through August are as follows:

Dollars

Units

March

$100,000

10,000

April

$110,000

11,000

May

$120,000

12,000

June

$130,000

13,000

July

$140,000

14,000

August

$150,000

15,000

Using the preceding information, compute the following amounts:

a) ( Budgeted purchases in dollars for May

b) ( Budgeted Cash Collections for May

c) ( Budgeted Cash Disbursements for June