Question

Part 2: Budget Completion						Indicate your
Fill in the missing information where indicated.						answers below:
Cash Collections Budget						1
						2
• Accounts receivable, beginning balance	$25,000					3
• Sales collected in the quarter sales are made	60%					4
• Sales collected in the quarter after sales are made	40%					5
						6
	Qtr. 1	Qtr. 2	Qtr. 3	Qtr. 4		7
Total sales	$250,000	$300,000	$400,000	$325,000		8
						9
Construct the schedule of expected cash collections						10
	Qtr. 1	Qtr. 2	Qtr. 3	Qtr. 4		11
Beginning balance accounts receivable	$      25,000					12
First-quarter sales	1	2
Second-quarter sales		3	4
Third-quarter sales			5	6
Fourth-quarter sales				$     195,000
Total cash collections	?	?	?	?
Production Budget
• Desired ending finished goods inventory is	15%	of the budgeted unit sales of the next quarter
	Qtr. 1	Qtr. 2	Qtr. 3	Qtr. 4
Budgeted unit sales	12500	15000	20000	16250
Add desired ending finished goods inventory	7	8	9	5000
Total needs	?	?	?	21250
Less beginning finished goods inventory	2000	10	11	12
Required production in units	?	?	?	?
Cash Budget						Indicate your
Note: Your cash collections will come from the Cash Collections Budget completed above.						answers below:
• Line of credit interest rate	6%
• Minimum cash balance that must be on hand	$12,000					13
• Must borrow in increments of	$5,000					14
						15
	Qtr. 1	Qtr. 2	Qtr. 3	Qtr. 4		16
Beginning cash balance	$         18,000	19	26	33		17
Add: Cash collections	13	20	27	34		18
Total cash available	14	21	28	35		19
Less: Cash disbursements						20
Materials	$         75,000	$         73,000	$         90,000	$         65,000		21
Direct labor	$         32,000	$         42,000	$         42,000	$         34,000		22
Manufacturing overhead	$         42,000	$         57,000	$         62,000	$         52,000		23
Selling and administrative	$         43,000	$         52,000	$         57,000	$         46,000		24
Equipment purchase	$         30,000	$         50,000	$      125,000	$         65,000		25
Total disbursements	$      222,000	$      274,000	$      376,000	$       262,000		26
Excess (deficiency)	15	22	29	36		27
Financing						28
Borrowing	16	23	30	37		29
Repayments				38		30
Interest				39		31
Total financing	17	24	31	40		32
Ending cash balance	18	25	32	41		33
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						41

Answer 1