Carver Lumber sells lumber and general building supplies to building contractors in a medium-sized town in Montana. Data regarding the store's operations follow: • Sales are budgeted at $369,000 for November, $339,000 for December, and $319,000 for January. • Collections are expected to be 80% in the month of sale and 20% in the month following the sale. • The cost of goods sold is 70% of sales. The company desires to have an ending merchandise inventory equal to 70% of the following month's cost of goods sold. Payment for merchandise is made in the month following the purchase. • Other monthly expenses to be paid in cash are $26,600. • · Monthly depreciation is $19,800. . • Ignore taxes. Balance Sheet October 31 Assets Cash Accounts receivable Inventory Property, plant and equipment, net of $511,500 accumulated depreciation Total assets Liabilities and Stockholders' Equity Common stock Accounts payable Retained earnings Total liabilities and stockholders' equity $ 24,700 80,800 180,810 1,021,000 $ 1,307,310 $ 281,500 799,000 226,810 $ 1,307,310 The net income for December would be:

Shalimar Company manufactures and sells industrial products. For next year, Shalimar has budgeted the follow sales: In Shalimars experience, 10 percent of sales are paid in cash. Of the sales on account, 65 percent are collected in the quarter of sale, 25 percent are collected in the quarter following the sale, and 7 percent are collected in the second quarter after the sale. The remaining 3 percent are never collected. Total sales for the third quarter of the current year are 4,900,000 and for the fourth quarter of the current year are 6,850,000. Required: 1. Calculate cash sales and credit sales expected in the last two quarters of the current year, and in each quarter of next year. 2. Construct a cash receipts budget for Shalimar Company for each quarter of the next year, showing the cash sales and the cash collections from credit sales. 3. What if the recession led Shalimars top management to assume that in the next year 10 percent of credit sales would never be collected? The expected payment percentages in the quarter of sale and the quarter after sale are assumed to be the same. How would that affect cash received in each quarter? Construct a revised cash budget using the new assumption.

Lens Junction sells lenses for $45 each and is estimating sales of 15,000 units in January and 18,000 in February. Each lens consists of 2 pounds of silicon costing $2.50 per pound, 3 oz of solution costing $3 per ounce, and 30 minutes of direct labor at a labor rate of $18 per hour. Desired inventory levels are: Â Prepare a sales budget, production budget. direct materials budget for silicon and solution, and a direct labor budget.

Pilsner Inc. purchases raw materials on account for use in production. The direct materials purchases budget shows the following expected purchases on account: Pilsner typically pays 25% on account in the month of billing and 75% the next month. Required: 1. How much cash is required for payments on account in May? 2. How much cash is expected for payments on account in June?