Question

Esquire Products Inc. expects the following monthly sales:

January	\(28,000
February	\)19,000
March	\(12,000
April	\)14,000
May	\(8,000
June	\)6,000
July	\(22,000
August	\)26,000
September	\(29,000
October	\)34,000
November	\(42,000
December	\)24,000
Total annual sales	\(264,000

Cash sales are 40 percent in a given month, with the remainder going into accounts receivable. All receivables are collected in the month following the sale. Esquire sells all of its goods for \)2 each and produces them for \(1 each. Esquire uses level production, and average monthly production is equal to annual production divided by 12.

e. Determine total current assets for each month. Include cash, accounts receivable, and inventory. Accounts receivable equal sales minus 40 percent of sales for a given month. Inventory is equal to ending inventory (part a) times the cost of \)1 per unit.

Short answer

The current assets held by the company in January is $33,600 and in December is $70,200.

Step-by-step solution

Importance of current assets held by the company

The current assets of an organization are important as they help the organization in covering its operating expenses and also meet its short-term obligations. These assets also help in maintaining the liquidity of the organization.

Total current assets held by the company

Month	Cash	Accounts receivables	Inventory	Total current assets
January	$7,800	$16,800	$9,000	$33,600
February	$13,800	$11,400	$10,500	$35,700
March	$11,600	$7,200	$15,500	$34,300
April	$6,000	$8,400	$19,500	$33,900
May	$3,000	$4,800	$26,500	$34,300
June	$3,000	$3,600	$34,500	$41,100
July	$3,000	$13,200	$34,500	$50,700
August	$3,000	$15,600	$32,500	$51,100
September	$3,000	$17,400	$29,000	$49,400
October	$8,600	$20,400	$23,000	$52,000
November	$27,400	$25,200	$13,000	$65,600
December	$43,800	$14,400	$12,000	$70,200