Question

Esquire Products Inc. expects the following monthly sales: January February March April May June $ 38,000 July 29,000 August 22,000 September 24,000 October 18.ee November 16,eee December Total sales = $384,cee $ 32,000 36,000 39,000 44,000 52,00 34, eee Cash sales are 40 percent in a given month, with the remainder going into accounts receivable. All receivables are collected in the month following the sale. Esquire sells all of its goods for $2 each and produces them for $1 each. Esquire uses level production, and average monthly production is equal to annual production divided by 12 a. Generate a monthly production and inventory schedule in units. Beginning inventory in January is 22.000 units. January February March April May June July August September October November December Esquire Products Inc. Production and Inventory Schedule in Units Beginning Inventory Production Sales 22.000 10,000 10,000 19.000 16.000 14.500 20.500 10,000 11.000 25,500 10,000 12,000 29,500 16,000 0.000 36,500 10,000 8.000 44,500 10,000 10,000 44.500 10,000 18,000 42.500 10,000 10,500 39,000 10,000 22.000 33.000 10,000 20.000 23.000 16.000 17,000 Ending Inventory 10.000 20,500 25,500 20,500 36.500 44,500 44,500 42,500 30,000 33.000 23,000 22,000

Answer 1

Solution:

Il January February March April May June July August September October November December Requirement A Esquire Products Inc. Production and Inventory Schedule in Units Beginning + Production Sales Inventory 22,000 16,000 19,000 19,000 16,000 14,500 20,500 16,000 11,000 25,500 16,000 12,000 29,500 16,000 9,000 36,500 16,000 8,000 44,500 16,000 16,000 44,500 16,000 18,000 42,500 16,000 19,500 39,000 16,000 22,000 33,000 16,000 26,000 23,000 16,000 17,000 Ending Inventory 19,000 20,500 25,500 29,500 36,500 44,500 44,500 42,500 39,000 33,000 23,000 22,000

Requirement B Esquire Products Inc. Cash Receipts Schedule February March $29,000 $22,000 January $38,000 April $24,000 May $18,000 June $16,000 Sales Cash receipts: Cash Sales (40%) Prior month's credit sales Total cash receipts $15,200 $12,000 $27,200 $11,600 $22,800 $34,400 $8,800 $17,400 $26,200 $9,600 $13,200 $22,800 $7,200 $14,400 $21,600 $6,400 $10,800 $17,200 Esquire Products Inc. Cash Receipts Schedule July August September $32,000 $36,000 $39,000 October $44,000 November $52,000 December $34,000 Sales Cash receipts: Cash Sales (40%) Prior month's credit sales Total cash receipts $12,800 $9,600 $22,400 $14,400 $19,200 $33,600 $15,600 $21,600 $37,200 $17,600 $23,400 $41,000 $20,800 $26,400 $47,200 $13,600 $31,200 $44,800

Requirement Esquire Products Inc. Cash Payment Schedule Constant Production January February March $16,000 $16,000 $16,000 $8,400 $8,400 $8,400 $24,400 $24,400 $24,400 Production Cost Other Cash Payments Total cash Payments April $16,000 $8,400 $24,400 May $16,000 $8,400 $24,400 June $16,000 $8,400 $24,400 Esquire Products Inc. Cash Payment Schedule Constant Production July August September $16,000 $16,000 $16,000 $8,400 $8,400 $8,400 $24,400 $24,400 $24,400 Production Cost Other Cash Payments Total cash Payments October $16,000 $8,400 $24,400 November $16,000 $8,400 $24,400 December $16,000 $8,400 $24,400

Beginning Cash Net Cash flow Cumulative cash balance Monthly loan or (repayment) Ending cash balance Cumulative loan balance January $3,000 $2,800 $5,800 $0 $5,800 $0 Requirement D Esquire Products Inc. Cash Budget February March $5,800 $15,800 $10,000 $1,800 $15,800 $17,600 $0 $0 $15,800 $17,600 $0 $0 April $17,600 $1,600 $16,000 $0 $16,000 $0 May $16,000 -$2,800 $13,200 $0 $13,200 $0 June $13,200 $7,200 $6,000 $0 $6,000 $0 Beginning Cash Net Cash flow Cumulative cash balance Monthly loan or (repayment) Ending cash balance Cumulative loan balance July $6,000 -$2,000 $4,000 $0 $4,000 $0 Esquire Products Inc. Cash Budget August September $4,000 $13,200 $9,200 $12,800 $13,200 $26,000 $0 $0 $13,200 $26,000 $0 $0 October $26,000 $16,600 $42,600 $0 $42,600 $0 November $42,600 $22,800 $65,400 $0 $65,400 $0 December $65,400 $20,400 $85,800 $0 $85,800 $0

January February March April May June July August September October November December Requirement E Esquire Products Inc. Assets Accounts Cash Receivable $5,800 $22,800 $15,800 $17,400 $17,600 $13,200 $16,000 $14,400 $13,200 $10,800 $6,000 $9,600 $4,000 $19,200 $13,200 $21,600 $26,000 $23,400 $42,600 $26,400 $65,400 $31,200 $85,800 $20,400 Total Current Inventory Assets $19,000 $47,600 $20,500 $53,700 $25,500 $56,300 $29,500 $59,900 $36,500 $60,500 $44,500 $60,100 $44,500 $67,700 $42,500 $77,300 $39,000 $88,400 $33,000 $1,02,000 $23,000 $1,19,600 $22,000 $1,28,200