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##### Prepare the sales budget for January and February.

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Question

3. Mountaineers sells its rock-climbing shoes worldwide. Mountaineers expects to sell 4,000 pairs of shoes for \$165 each in January, and 2,000 pairs of shoes for \$220 each in February. All sales are cash only.;Requirement;Prepare the sales budget for January and February.;4. Review your results from exercise 3. Mountaineers expects cost of goods sold to average 75% of sales revenue, and the company expects to sell 4,600 pairs of shoes in March for \$240 each. Mountaineers? target ending inventory is \$18,000 plus 45% of the next month?s cost of goods sold.;Requirement;R1. Use this information and the sales budget prepared in S21-3 to prepare Mountaineers? inventory, purchases, and cost of goods sold budget for January and February.;5. Refer to the Mountaineers? sales budget that you prepared in exercise 3. Now assume that Mountaineers? sales are 20% cash and 80% on credit. Mountaineers? collection history indicates that credit sales are collected as follows;30% of month in sales;60% of month after the sale;7% two months after the sale;3% never collected;6. Mountaineers has \$8,600 cash on hand on December 1. The company requires a minimum cash balance of \$7,400. December cash collections are \$548,600. Total cash payments for December are \$563,230.;Requirement;Prepare a cash budget for December. Will Mountaineers need to borrow cash by the end of December?;November sales totaled \$386,000 and December sales were \$399,500.;Requirement;Prepare a schedule for the budgeted cash collections for January and February.

Paper#20457 | Written in 18-Jul-2015

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