# Accounting Review

Review Chapter 9

26. Parlee Company’s sales are 30% in cash and 70% on credit. Sixty % of the credit sales are collected in the month of sale, 25% in the month following sale, and 12% in the second month following sale. The remainder are uncollectible. The following are budgeted sales data:

Total cash receipts in April would be budgeted to be:
A. \$38,900
B. \$47,900
C. \$27,230
D. \$36,230

27. The PDQ Company makes collections on credit sales according to the following schedule:

25% in month of sale
70% in month following sale
4% in second month following sale
1% uncollectible

The following sales have been budgeted:

Cash collections in June would be:
A. \$113,400
B. \$110,000
C. \$111,000
D. \$115,500

28. Tolla Company is estimating the following sales for the first six months of next year:

Sales at Tolla are normally collected as 70% in the month of sale, 25% in the month following the sale, and the remaining 5% being uncollectible. Also, those customers paying in the month of sale are given a 2% discount. Based on this information, how much cash should Tolla expect to collect during the month of April?
A. \$281,260
B. \$361,260
C. \$366,010
D. \$393,760

29. Orion Corporation is preparing a cash budget for the six months beginning January 1. Shown below are the company’s expected collection pattern and the budgeted sales for the period.
Expected collection pattern:
65% collected in the month of sale
20% collected in the month after sale
10% collected in the second month after sale
4% collected in the third month after sale
1% uncollectible
Budgeted sales:

The estimated total cash collections during April from sales and accounts receivables would be:
A. \$155,900
B. \$167,000
C. \$171,666
D. \$173,400

30. Pardee Company plans to sell 12,000 units during the month of August. If the company has 2,500 units on hand at the start of the month, and plans to have 2,000 units on hand at the end of the month, how many units must be produced during the month?
A. 11,500
B. 12,500
C. 12,000
D. 14,000

31. Modesto Company produces and sells Product AlphaB. To guard against stockouts, the company requires that 20% of the next month’s sales be on hand at the end of each month. Budgeted sales of Product AlphaB over the next four months are:

Budgeted production for August would be:
A. 62,000 units
B. 70,000 units
C. 58,000 units
D. 50,000 units

33. Fab Manufacturing Corporation manufactures and sells stainless steel coffee mugs. Expected mug sales at Fab (in units) for the next three months are as follows:

Fab likes to maintain a finished goods inventory equal to 30% of the next month’s estimated sales. How many mugs should Fab plan on producing during the month of November?
A. 23,200 mugs
B. 26,800 mugs
C. 25,900 mugs
D. 34,300 mugs

34. Superior Industries’ sales budget shows quarterly sales for the next year as follows:

Company policy is to have a finished goods inventory at the end of each quarter equal to 20% of the next quarter’s sales. Budgeted production for the second quarter should be:
A. 7,200 units
B. 8,000 units
C. 8,800 units
D. 8,400 units

35. The Waverly Company has budgeted sales for next year as follows:

The ending inventory of finished goods for each quarter should equal 25% of the next quarter’s budgeted sales in units. The finished goods inventory at the start of the year is 3,000 units. Scheduled production for the third quarter should be:
A. 17,500
B. 18,500
C. 22,000
D. 13,500