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Shawn, Inc
Shawn, Inc. makes Lego figures. The budget reports Shawn plans on selling 15 figures in November, 20 in December, and 5 in January – all on credit. Each figure sells for $20 and costs Shawn $5. Shawn receives 50% of the current month’s sells during the current month and 50% in the following month. Shawn pays 100% of his costs in the current month. Shawn makes sure he has 40% of next month’s sales available in inventory at the end of the current month. Based on this, Shawn begins November with 6 figures already made.
1. How much cash will Shawn receive from customers in December?
2. How much cash will Shawn receive from customers in January?
3. How much will Shawn's cash account change in December?
Expert Solution
| Shawn, Inc. | November | December | January | Note |
| Sales (Units) | 15.00 | 20.00 | 5.00 | A |
| Sell price | 20.00 | 20.00 | 20.00 | B |
| Budgeted Sales Revenue | 300.00 | 400.00 | 100.00 | C=A*B |
| Answer 1 | December | |||
| 50% of Decmeber sales | 200.00 | |||
| 50% of Novmeber sales | 150.00 | |||
| Cash receiveed from customers in December | 350.00 | |||
| Answer 2 | January | |||
| 50% of January sales | 200.00 | |||
| 50% of Decmeber sales | 50.00 | |||
| Cash receiveed from customers in January | 250.00 | |||
| Workings for Answer 3 | December | |||
| Sales (Units) | 20.00 | |||
| Add: Closing inventory (40% of sales of Januray) | 2.00 | |||
| Less: Opening inventory (40% of sales of December) | 8.00 | |||
| Purchase Budget (Units) | 14.00 | |||
| Unit price | 5.00 | |||
| Purchase cost | 70.00 | |||
| Answer 3 | December | |||
| Cash receiveed from customers in December | 350.00 | |||
| Less: Purchase cost | 70.00 | |||
| Cash account change in December | 280.00 |
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