Corning Incorporated sells its product for $24 per unit.  Its actual and projected sales follow:     Units Dollars January (actual) 18,500 $444,000 February (actual) 23,000    552,000 March (budgeted) 19,800    475,200 April (budgeted) 18,950    454,800 May (budgeted) 22,000    528,000   Here is added information about Corning’s operations:   All sales are on credit.  Recent experience show that 35% of sales are collected in the month of the sale, 45% in the month following the sale, 17% in the second month after the sale, and 3% prove to be uncollectible.  The product’s purchase price is $15 per unit.  All payments are payable within 21 days.  Thus 30% of purchases in any given month are paid for in that month, with the remaining 70% paid for in the following month.  The company has a policy to maintain an ending inventory of 20% of the next month’s projected sales plus a safety stock of 100 units.  The January 31 and February 28 actual inventory levels are consistent with this policy.  Selling and administrative expenses for the year are $2,456,000 and are paid evenly throughout the year in cash.  The company’s minimum cash balance at month-end is $50,000.  This minimum is maintained, if necessary, by borrowing cash from the bank.  If the balance exceeds $50,000, the company repays as much of the loan balance as it can without going below the minimum.  This loan carries an annual interest rate of 6% (0.5% per month).  At February 28, the loan balance is $14,000, and the company’s cash balance is $50,000. Prepare an excel table that shows cash collections from accounts receivable for March and April

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

Corning Incorporated sells its product for $24 per unit.  Its actual and projected sales follow:

 

 

Units

Dollars

January (actual)

18,500

$444,000

February (actual)

23,000

   552,000

March (budgeted)

19,800

   475,200

April (budgeted)

18,950

   454,800

May (budgeted)

22,000

   528,000

 

Here is added information about Corning’s operations:

 

All sales are on credit.  Recent experience show that 35% of sales are collected in the month of the sale, 45% in the month following the sale, 17% in the second month after the sale, and 3% prove to be uncollectible.  The product’s purchase price is $15 per unit.  All payments are payable within 21 days.  Thus 30% of purchases in any given month are paid for in that month, with the remaining 70% paid for in the following month.  The company has a policy to maintain an ending inventory of 20% of the next month’s projected sales plus a safety stock of 100 units.  The January 31 and February 28 actual inventory levels are consistent with this policy.  Selling and administrative expenses for the year are $2,456,000 and are paid evenly throughout the year in cash.  The company’s minimum cash balance at month-end is $50,000.  This minimum is maintained, if necessary, by borrowing cash from the bank.  If the balance exceeds $50,000, the company repays as much of the loan balance as it can without going below the minimum.  This loan carries an annual interest rate of 6% (0.5% per month).  At February 28, the loan balance is $14,000, and the company’s cash balance is $50,000.

Prepare an excel table that shows cash collections from accounts receivable for March and April

 

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 3 images

Blurred answer
Knowledge Booster
Risk Analysis
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education