Randall Company is a merchandising company that sells a single product. The company’s inventories, production, and sales in units for the next three months have been forecasted as follows:

October November December
Beginning inventory…………… 10,000 10,000 10,000
Merchandise Purchases 60,000 70,000 35,000
Sales 60,000 70,000 40,000
Ending Inventory 10,000 10,000 5,000

Units are sold for $12 each. One fourth of all sales are paid for in the month of sale and the balance is paid in the following month. Accounts receivable at sept 30 totaled $450,000.

Merchandise is purchase for $7 per unit. Half of the purchase are paid for in the month of the purchase and the remainder is paid in the month following purchase. Selling and administrative expenses are expected to total $120,000 each month. One half of these expenses will be paid in the month in which they are incurred and the balance will be paid in the following month. There is no depreciation. Accounts payable at sept 30 totaled $290,000.

Cash at sept 30 totaled $80,000. A payment of $300,000 for purchase of equipment is scheduled for Nov, and a dividend of $200,000 is to be paid in Dec.

Required

a. Prepare a schedule of expected cash collections in good form for each of the months of October, November, December.
b. Prepare a schedule showing expected cash disbursements for merchandise purchase and selling and administrative expenses for each of the months Oct, Nov and Dec.





I have finished the sum. Can you please take a look at it and tell me whether I have done correctly and what more I need to do. Thanks

Oct Nov Dec
Sales 60,000 70,000 40,000
*12 *12 *12
720,000 840,000 480,000


Schedule of expected cash Collections
Oct Nov Dec
AR Beginning 450,000
Balance

Oct sales
(720,000*25%,75%) 180,000 540,000

Nov sales
(840,000*25%,75%) 210,000 630,000

Dec sales 120,000
-------- ---------- -----------
630,000 750,000 750,00



Expected Cash Payments
October Nov Dec

Cost of Raw materials at 720,000 840,000 420,000
$7 per unit



AP Beginning Balance 290,000


Oct Purchase
(720,000*50%,50%) 360,000 360,000


Nov Purchase
(840,000*50%,50%) 420,000 420,000

Dec Purchase
(420,000*50%,50%) 210,000

Selling and admin expense 60,000 120,000 120,000
710,000 900,000 750,000