Problem 9-26Sales and Cash Collections Budgets
Mountain Mash produces ice cream for wholesale distribution togrocers, restaurants, and independent ice cream shops. March,April, May, June, and July are busy months for the company as itscustomers gear up for the spring and summer rush. Mountain Mash hasprojected the following level of sales (in gallons) for Marchthrough July:
The company has a set wholesale selling price of $3.50 pergallon. Mountain Mash’s customers purchase ice cream on credit,with the agreement that they must pay invoices within 30 days.Nonetheless, not all customers pay within that time frame. MountainMash’s credit manager has developed the following table to show thetypical cash collection pattern:
Required:
A. Prepare a sales budget for March, April,May, June, and July. When required, round answers to the nearestcent.
Mountain MashSales Budget
March
April
May
June
July
Budgeted sales (gallons)
Selling price per gallon
$
$
$
$
$
Total budgeted sales
$
$
$
$
$
B. Prepare a cash receipts budget for May,June, and July.
Mountain MashCash Receipts Budget
Month
Sales
May
June
July
March
$
$
–
–
April
$
$
$
–
May
$
$
$
$
June
$
–
$
$
July
$
–
–
$
Total cash receipts from sales
$
$
$
C. If sales and cash collections are exactly asthe company estimates, how much will customers owe Mountain Mash asof the end of July?$
Month March April May Units 70,000 80,000 85,000 Month June July Units 90,000 92,000 Show transcribed image text Month March April May Units 70,000 80,000 85,000 Month June July Units 90,000 92,000
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