Question

Tilson Corporation has projected sales and production in units for the second quarter of the coming year as follows: April May June Sales 43,000 12,000 12,000 Production 53,000 12,000 12,000 Cash-related production costs are budgeted at $9 per unit produced. Of these production costs, 35% are paid in the month in which they are incurred and the balance in the following month. Selling and administrative expenses will amount to $70,000 per month. The accounts payable balance on March 31 totals $172,000, which will be paid in April. All units are sold on account for $21 each. Cash collections from sales are budgeted at 60% in the month of sale, 20% in the month following the month of sale, and the remaining 20% in the second month following the month of sale. Accounts receivable on April 1 totaled $411,000 ($91,000 from February's sales and $320,000 from March’s sales). Required: a. Prepare a schedule for each month showing budgeted cash disbursements for Tilson Corporation. b. Prepare a schedule for each month showing budgeted cash receipts for Tilson Corporation.

Answer 1

Schedule for Cash Disbursements
Particulars	Apr	May	Jun
Production Cost
-For 35%	166950 (53000*9*0.35)	37800 (12000*9*0.35)	37800 (12000*9*0.35)
-For balance 65%		310050 (53000*9*0.65)	70200 (12000*9*0.65)
Accounts Payable	172000	-	-
Admin Expense	70000	70000	70000
Total	408950	417850	178000

Schedule for Cash Receipts
Particulars	Apr	May	Jun
Cash Collection
-For 60%	541800 (43000*21*0.6)	151200 (12000*21*0.6)	151200 (12000*21*0.6)
-For next 20%		180600 (43000*21*0.2)	50400 (12000*21*0.2)
-For balance 20%			180600 (43000*21*0.2)
-For Feb Sales	91000
-For Mar Sales		160000 (320000*0.2)	160000 (320000*0.2)
Total	632800	491800	542200