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COMM 294 − Assignment #3 – Due Date: March, 18th
Question 1 (18 marks) Jay Leno Jokes – for - Blokes is a wholesale distributor of joke books and humorous magazines. The company is preparing its budget for the first three months of 2010. At the end of 2009, the following balances are estimated: Accounts Receivable Inventory Accounts Payable* Other Payables * For inventory purchases $188,280 52,875 41,700 7,120

Management has agreed on the following guidelines in preparing the budget: Collections • Credit sales are billed (invoiced) on the last day of each month. • Cash customers and credit customers who pay by the 10th of the month after billing are allowed a 1% discount. • 10% of sales are for cash. Of the credit sales, 10% are received within the discount period; another 40% are received during the rest of the month after billing; 40% are received in the second month after billing; and 10% are received in the third month after billing. Payments • 40% of purchases are paid for in the month of purchase. The rest are paid in the next month. • Of the operating expenses incurred, 60% are paid in the month incurred and the remainder is paid in the next month. Other Information • All sales are made at 200% of cost. • Desired ending inventory is set at 75% of the following month’s Cost of Goods Sold. • Actual and projected sales are estimated at October $122,000 November 128,000 December 133,000 January 141,000 February 139,000 March 124,000 April 127,000 Selling and administrative expenses are 10% of sales plus $6,000 monthly. Included in the monthly selling and administrative expenses is $1,500 of amortization/depreciation. Required: a. Determine cash receipts for the months of January, February and March. b. Determine the purchases for the months of January, February and March c. Determine cash disbursements for the months of January, February and March

Question 2 (12 marks) Terry Hatcher’s Brooches Ltd. manufactures brooches using a variety of stock moulds....
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