On March 31,Streuling Enterprises,a Merchandising Firm,had an Inventory of 38,000

On March 31,Streuling Enterprises,a merchandising firm,had an inventory of 38,000 units,and it had accounts receivable totalling $85,000.Sales,in units,have been budgeted as follows for the next four months:

Streuling's board of directors has established a policy to commence in April that the inventory at the end of each month should contain 40% of the units required for the following month's budgeted sales.

The selling price is $2 per unit. One-third of sales are paid for by customers in the month of the sale; the balance is collected in the following month.

Required:

a) Prepare a merchandise purchases budget showing how many units should be purchased for each of the months April, May, and June.
b) Prepare a schedule of expected cash collections for each of the months April, May, and June.

Correct Answer:

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