Valley's managers have made the following additional assumptions and estimates:Estimated sales for July and August are $345,000 and $315,000 respectivelyEach month's sales are 20% cash sales and 80% credit sales. Each month's credit sales are collected 30% in the month of the sale and 70% in the month following the sale. All of the accounts receivable at June 30 will be collected in JulyEach month's ending inventory must equal 20% of the cost of the next month's sales. The Cost of Goods Sold is 60% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts payable at June 30 will be paid in JulyMonthly selling and administrative expenses are always $75,000. Each month $10,000 of this total amount is depreciation expense and the remaining $65,000 relates to expenses that are paid in the month they are incurredThe company does not plan to buy or sell any plant and equipment during July. It will not borrow any money, pay any dividends, issue any common stock or repurchase any of its own common stock during JulyRequired:I need help with calculating the estimated account receivable turnover and inventory turnover for the month of July 5 Balance StatementValley Manufacturing IncBudgeted Balance StatementJuly 31, 2021AssetsCashAccounts receivableInventoryPlant and equipment, net of depreciationTotal AssetsLiabilities and Stockholders' EquityAccounts payableCommon stockRetained earningsTotal Liabilities and Stockholders' Equity$$

*Estimated account receivable turnover: Credit sales = 345000×80% = $276000 Out of $276000, 30% will…

Answered: Cash Accounts receivable Inventory…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Valley's managers have made the following additional assumptions and estimates:

Estimated sales for July and August are $345,000 and $315,000 respectively
Each month's sales are 20% cash sales and 80% credit sales. Each month's credit sales are collected 30% in the month of the sale and 70% in the month following the sale. All of the accounts receivable at June 30 will be collected in July
Each month's ending inventory must equal 20% of the cost of the next month's sales. The Cost of Goods Sold is 60% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts payable at June 30 will be paid in July
Monthly selling and administrative expenses are always $75,000. Each month $10,000 of this total amount is depreciation expense and the remaining $65,000 relates to expenses that are paid in the month they are incurred
The company does not plan to buy or sell any plant and equipment during July. It will not borrow any money, pay any dividends, issue any common stock or repurchase any of its own common stock during July

Required:

I need help with calculating the estimated account receivable turnover and inventory turnover for the month of July

5 Balance Statement
Valley Manufacturing Inc
Budgeted Balance Statement
July 31, 2021
Assets
Cash
Accounts receivable
Inventory
Plant and equipment, net of depreciation
Total Assets
Liabilities and Stockholders' Equity
Accounts payable
Common stock
Retained earnings
Total Liabilities and Stockholders' Equity
$
$

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