"6-20. Solution:Seasonal Products Corporationa. Production and inventory schedule in units= EndingInventory1($1 perBeginning +Production 2Inventory (level) –Sales unit)January 5,000 7,000 10,000 2,000February 2,000 7,000 7,500 1,500March 1,500 7,000 2,500 6,000April 6,000 7,000 1,500 11,500May 11,500 7,000 500 18,000June 18,000 7,000 1,500 23,500July 23,500 7,000 5,000 25,500August 25,500 7,000 7,000 25,500September 25,500 7,000 10,000 22,500October 22,500 7,000 12,500 17,000November 17,000 7,000 15,000 9,000December 9,000 7,000 11,000 5,0001$168,000 sales/$2 price = 84,000 units84,000 units/12 months = 7,000 units per month2Monthly dollar sales/$2 = number of unitsS6-29 S6-306-20. (Continued)b. Cash Receipts Schedule (take dollar values from problem statement) Jan. Feb. Mar. Apr. May JuneSales $20,000 $15,000 $ 5,000 $3,000 $1,000 $3,00020% Cash sales 4,000 3,000 1,000 600 200 60080% Prior month’s sales 12,000* 16,000 12,000 4,000 2,400800Total receipts $16,000 $19,000 $13,000 $4,600 $2,600 $1,400*based on December sales of $15,000 July Aug. Sept. Oct. Nov. Dec.Sales $10,000 $14,000 $20,000 $25,000 $30,000 $22,00020% Cash sales 2,000 2,800 4,000 5,000 6,000 4,40080% Prior month’s sales2,400 8,000 11,200 16,000 20,000 24,000Total receipts $ 4,400 $10,800 $15,200 $21,000 $26,000 $28,400 S6-316-20. (Continued)c. Cash Payments ScheduleConstant production Jan. Feb. Mar. Apr. May June7,000 units × $1 $ 7,000 $ 7,000 $ 7,000 $ 7,000 $ 7,000 $ 7,000Other cash payments 6,000 6,000 6,000 6,000 6,000 6,000Total payments $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 July Aug. Sept. Oct. Nov. Dec.7,000 units × $1 $ 7,000 $ 7,000 $ 7,000 $ 7,000 $ 7,000 $ 7,000Other cash payments 6,000 6,000 6,000 6,000 6,000 6,000Total cash payments $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 S6-326-20. (Continued)d. Cash Budget Jan. Feb. Mar. Apr. May JuneCash flow $3,000 $ 6,000 -0- ($ 8,400) ($10,400) ($11,600)Beginning cash 1,000 4,000 10,000 10,000 1,600 1,000Cumulative cash balance 4,000 10,000 10,000 1,600 (8,800) (10,600)Monthly loan or (repayment) -0- -0- -0- -0- 9,800 11,600Cumulative loan -0- -0- -0- -0- 9,800 21,400Ending cash balance $4,000 $10,000 $10,000 $ 1,600 $ 1,000 $ 1,000 July Aug. Sept. Oct. Nov. Dec.Cash flow ($ 8,600) ($2,200) $ 2,200 $ 8,000 $13,000 $15,400Beginning cash 1,000 1,000 1,000 1,000 1,000 1,000Cumulative cash balance (7,600) (1,200) 3,200 9,000 14,000 16,400Monthly loan or (repayment) 8,600 2,200 (2,200) (8,000) (13,000) (9,000)Cumulative loan 30,000 32,200 30,000 22,000 9,000 -0-Ending cash balance $ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 7,400 6-20. (Continued)e. AssetsAccounts Total Cash Receivable Inventory CurrentJanuary $ 4,000 $16,000 $ 2,000 $22,000February 10,000 12,000 1,500 23,500March 10,000 4,000 6,000 20,000April 1,600 2,400 11,500 15,500May 1,000 800 18,000 19,800June 1,000 2,400 23,500 26,900July 1,000 8,000 25,500 34,500August 1,000 11,200 25,500 37,700September 1,000 16,000 22,500 39,500October 1,000 20,000 17,000 38,000November 1,000 24,000 9,000 34,000December 7,400 17,600 5,000 30,000 The instructor may wish to relate this table to the case budgetto show how the buildup in current assets is financed. Also,the table shows how the assets build up from the least liquidcurrent asset (inventory) to the next liquid asset (accountsreceivables), and finally by December, the cycle is ready tostart over with the flow into the cash balance when the firmeliminates its final loan balance. "