Budgeting The Hurley Company's actual November and December unit sales and estimated unit sales for the following four months as follows: The company's inventory policy is to hold enough inventory at the end of the month to meet 30% of next month's sales requirements. Each inventory item costs $1.75. Cash disbursement on purchases is made as follows: 40% is paid in the month of purchase and 60% is paid in the month following purchase. Each items sells for $4.00 and cash collection patterns are as follows: November - Actual 6,700 December - Actual 9,800 January - Estimated 6,200 February 8,900 March 6,600 April 7,100 % of sales made for cash 20% Credit sales are collected as follows - In the month of sale 35% In the month following sale 40% In the second month following sale 23% Uncollectible 2% Required -
a) Estimate the purchases (in units) for the months of January through March.
b) Estimate the cash disbursements on purchases for the months of January through March. What is the accounts payable at the end of March?
c) Estimate the cash collections for the months of January through March. What is the accounts receivable at the end of March?