Question

1. Below is information about actual sales of a product for June and July and the expected sales of August, September and October. Selling price for the product is $100. June $230,000, July $240,000, August $220,000, September $280,000 and October $310,000. November $340,000 Costs of Goods Sold equals to 70% of Sales. The end of inventory policy is 40% of the next month of quantity sales. Inventory is purchased on continuous basis during the month. 60% of inventory costs are paid in the month of purchases, and 40% is paid in the following month. 1-1 Calculate the expected purchases (units) for August and September: 1-2 Calculate the budgeted cash payments for August and September, assuming only payment arises from the above purchases. 1-3 Cash collection Company's cash collection policy is as follows. 60% of sales is collected in the month of sales 30% of sales is collected in the one month after the sales 8% of sales is collected in the two months after sales. 2% is generally never collected. Compute the expected cash collection for August, September and October. 1-4 The company expects to have a big cash payment in October and wants to keep cash balance at the beginning for $120,000. If cash payment and receive are only above for August and September, Do the company have enough cash at the beginning of October? Cleraly show your calculations.