Question 3 (20 marks) Lion King Toys expects the following sales in units of their...
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Question 3 (20 marks) Lion King Toys expects the following sales in units of their best-selling toy "Ooshies" in 2019/2020: Aug Sep Nov Dec Jan 2020 38,000 40,000 46,000 50,000 56,000 40,000 Oct Sales are 80% credit sales with the remainder in cash. 60% of credit customers pay in the month following the sale, 38% pay 2 months following the sale and 2% are uncollectable (bad debts). In 2019, the business has an ending inventory target of 25% of the following month's sales volume. The toys are purchased from a supplier for $10 each and sold to customers at $15 each. Purchases are paid in the month following the purchase. Requirements: a. Prepare the sales budget including expected cash collections for the quarter October - December 2019, showing each month and the total for the quarter (use the format in Exhibit 3.6 on page 106 of your text as a guide). (10 marks) b. Prepare the purchases budget including cash payments for purchases for the quarter October - December 2019, showing each month and the total for the quarter (use the format in Exhibit 3.10 on page 110 of your text as a guide). (10 marks)
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