Problem 8-22 Cash Budget with Supporting Schedules [LO8-2, LO8-4, LO8-8]
|
Garden Sales, Inc., sells garden supplies. Management is planning its cash needs for the second quarter. The company usually has to borrow money during this quarter to support peak sales of lawn care equipment, which occur during May. The following information has been assembled to assist in preparing a cash budget for the quarter: |
| a. | Budgeted monthly absorption costing income statements for April–July are: |
| April | May | June | July | |||||
| Sales | $ | 600,000 | $ | 900,000 | $ | 500,000 | $ | 400,000 |
| Cost of goods sold | 420,000 | 630,000 | 350,000 | 280,000 | ||||
| Gross margin | 180,000 | 270,000 | 150,000 | 120,000 | ||||
| Selling and administrative expenses: | ||||||||
| Selling expense | 79,000 | 120,000 | 62,000 | 51,000 | ||||
| Administrative expense* | 45,000 | 52,000 | 41,000 | 38,000 | ||||
| Total selling and administrative expenses | 124,000 | 172,000 | 103,000 | 89,000 | ||||
| Net operating income | $ | 56,000 | $ | 98,000 | $ | 47,000 | $ | 31,000 |
| *Includes $20,000 of depreciation each month. |
| b. | Sales are 20% for cash and 80% on account. |
| c. |
Sales on account are collected over a three-month period with 10% collected in the month of sale; 70% collected in the first month following the month of sale; and the remaining 20% collected in the second month following the month of sale. February’s sales totaled $200,000, and March’s sales totaled $300,000. |
| d. |
Inventory purchases are paid for within 15 days. Therefore, 50% of a month’s inventory purchases are paid for in the month of purchase. The remaining 50% is paid in the following month. Accounts payable at March 31 for inventory purchases during March total $126,000. |
| e. |
Each month’s ending inventory must equal 20% of the cost of the merchandise to be sold in the following month. The merchandise inventory at March 31 is $84,000. |
| f. | Dividends of $49,000 will be declared and paid in April. |
| g. | Land costing $16,000 will be purchased for cash in May. |
| h. |
The cash balance at March 31 is $52,000; the company must maintain a cash balance of atleast $40,000 at the end of each month. |
| i. |
The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $200,000. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter. |
| Required: | |
| 1. |
Prepare a schedule of expected cash collections for April, May, and June, and for the quarter in total. |
| 2. |
Prepare the following for merchandise inventory: |
| a. |
A merchandise purchases budget for April, May, and June. |
| b. |
A schedule of expected cash disbursements for merchandise purchases for April, May, and June, and for the quarter in total. |
| 3. |
Prepare a cash budget for April, May, and June as well as in total for the quarter. (Cash deficiency, repayments and interest should be indicated by a minus sign.) |
Garrison 15e Recheck 2015-01-16
References
eBook & Resources
In: Accounting
|
Garden Sales, Inc., sells garden supplies. Management is planning its cash needs for the second quarter. The company usually has to borrow money during this quarter to support peak sales of lawn care equipment, which occur during May. The following information has been assembled to assist in preparing a cash budget for the quarter: |
| a. | Budgeted monthly absorption costing income statements for April–July are: |
| April | May | June | July | |||||
| Sales | $ | 510,000 | $ | 660,000 | $ | 205,000 | $ | 310,000 |
| Cost of goods sold | 357,000 | 462,000 | 143,500 | 217,000 | ||||
| Gross margin | 153,000 | 198,000 | 61,500 | 93,000 | ||||
| Selling and administrative expenses: | ||||||||
| Selling expense | 71,000 | 116,500 | 25,500 | 31,000 | ||||
| Administrative expense* | 40,500 | 64,400 | 22,600 | 29,000 | ||||
| Total selling and administrative expenses | 111,500 | 180,900 | 48,100 | 60,000 | ||||
| Net operating income | $ | 41,500 | $ | 17,100 | $ | 13,400 | $ | 33,000 |
| *Includes $12,500 of depreciation each month. |
| b. | Sales are 20% for cash and 80% on account. |
| c. |
Sales on account are collected over a three-month period with 10% collected in the month of sale; 80% collected in the first month following the month of sale; and the remaining 10% collected in the second month following the month of sale. February’s sales totaled $105,000, and March’s sales totaled $205,000. |
| d. |
Inventory purchases are paid for within 15 days. Therefore, 50% of a month’s inventory purchases are paid for in the month of purchase. The remaining 50% is paid in the following month. Accounts payable at March 31 for inventory purchases during March total $93,100. |
| e. |
Each month’s ending inventory must equal 20% of the cost of the merchandise to be sold in the following month. The merchandise inventory at March 31 is $71,400. |
| f. | Dividends of $21,000 will be declared and paid in April. |
| g. | Land costing $29,000 will be purchased for cash in May. |
| h. |
The cash balance at March 31 is $43,000; the company must maintain a cash balance of atleast $40,000 at the end of each month. |
| i. |
The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $200,000. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter. |
| Required: | |
| 1. |
Prepare a schedule of expected cash collections for April, May, and June, and for the quarter in total. |
| 2. |
Prepare the following for merchandise inventory: |
| a. |
A merchandise purchases budget for April, May, and June. |
| b. |
A schedule of expected cash disbursements for merchandise purchases for April, May, and June, and for the quarter in total. |
| 3. |
Prepare a cash budget for April, May, and June as well as in total for the quarter. (Cash deficiency, repayments and interest should be indicated by a minus sign.) |
In: Accounting
Problem 8-22 Cash Budget with Supporting Schedules [LO8-2, LO8-4, LO8-8] Garden Sales, Inc., sells garden supplies. Management is planning its cash needs for the second quarter. The company usually has to borrow money during this quarter to support peak sales of lawn care equipment, which occur during May. The following information has been assembled to assist in preparing a cash budget for the quarter: a. Budgeted monthly absorption costing income statements for April–July are: April May June July Sales $ 600,000 $ 900,000 $ 500,000 $ 400,000 Cost of goods sold 420,000 630,000 350,000 280,000 Gross margin 180,000 270,000 150,000 120,000 Selling and administrative expenses: Selling expense 79,000 120,000 62,000 51,000 Administrative expense* 45,000 52,000 41,000 38,000 Total selling and administrative expenses 124,000 172,000 103,000 89,000 Net operating income $ 56,000 $ 98,000 $ 47,000 $ 31,000 *Includes $20,000 of depreciation each month. b. Sales are 20% for cash and 80% on account. c. Sales on account are collected over a three-month period with 10% collected in the month of sale; 70% collected in the first month following the month of sale; and the remaining 20% collected in the second month following the month of sale. February’s sales totaled $200,000, and March’s sales totaled $300,000. d. Inventory purchases are paid for within 15 days. Therefore, 50% of a month’s inventory purchases are paid for in the month of purchase. The remaining 50% is paid in the following month. Accounts payable at March 31 for inventory purchases during March total $126,000. e. Each month’s ending inventory must equal 20% of the cost of the merchandise to be sold in the following month. The merchandise inventory at March 31 is $84,000. f. Dividends of $49,000 will be declared and paid in April. g. Land costing $16,000 will be purchased for cash in May. h. The cash balance at March 31 is $52,000; the company must maintain a cash balance of atleast $40,000 at the end of each month. i. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $200,000. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter. Required: 1. Prepare a schedule of expected cash collections for April, May, and June, and for the quarter in total. 2. Prepare the following for merchandise inventory: a. A merchandise purchases budget for April, May, and June. b. A schedule of expected cash disbursements for merchandise purchases for April, May, and June, and for the quarter in total. 3. Prepare a cash budget for April, May, and June as well as in total for the quarter. (Cash deficiency, repayments and interest should be indicated by a minus sign.) Garrison 15e Recheck 2015-01-16
In: Accounting
|
Garden Sales, Inc., sells garden supplies. Management is planning its cash needs for the second quarter. The company usually has to borrow money during this quarter to support peak sales of lawn care equipment, which occur during May. The following information has been assembled to assist in preparing a cash budget for the quarter: |
| a. | Budgeted monthly absorption costing income statements for April–July are: |
| April | May | June | July | |||||
| Sales | $ | 780,000 | $ | 880,000 | $ | 315,000 | $ | 550,000 |
| Cost of goods sold | 546,000 | 616,000 | 220,500 | 385,000 | ||||
| Gross margin | 234,000 | 264,000 | 94,500 | 165,000 | ||||
| Selling and administrative expenses: | ||||||||
| Selling expense | 94,000 | 123,000 | 36,500 | 55,000 | ||||
| Administrative expense* | 52,000 | 95,800 | 35,800 | 52,000 | ||||
| Total selling and administrative expenses | 146,000 | 218,800 | 72,300 | 107,000 | ||||
| Net operating income | $ | 88,000 | $ | 45,200 | $ | 22,200 | $ | 58,000 |
| *Includes $23,500 of depreciation each month. |
| b. | Sales are 20% for cash and 80% on account. |
| c. |
Sales on account are collected over a three-month period with 10% collected in the month of sale; 70% collected in the first month following the month of sale; and the remaining 20% collected in the second month following the month of sale. February’s sales totaled $215,000, and March’s sales totaled $315,000. |
| d. |
Inventory purchases are paid for within 15 days. Therefore, 50% of a month’s inventory purchases are paid for in the month of purchase. The remaining 50% is paid in the following month. Accounts payable at March 31 for inventory purchases during March total $142,800. |
| e. |
Each month’s ending inventory must equal 20% of the cost of the merchandise to be sold in the following month. The merchandise inventory at March 31 is $109,200. |
| f. | Dividends of $43,000 will be declared and paid in April. |
| g. | Land costing $51,000 will be purchased for cash in May. |
| h. |
The cash balance at March 31 is $65,000; the company must maintain a cash balance of atleast $40,000 at the end of each month. |
| i. |
The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $200,000. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter. |
| Required: | |
| 1. |
Prepare a schedule of expected cash collections for April, May, and June, and for the quarter in total. |
| 2. |
Prepare the following for merchandise inventory: |
| a. |
A merchandise purchases budget for April, May, and June. |
| b. |
A schedule of expected cash disbursements for merchandise purchases for April, May, and June, and for the quarter in total. |
| 3. |
Prepare a cash budget for April, May, and June as well as in total for the quarter. (Cash deficiency, repayments and interest should be indicated by a minus sign.) |
In: Accounting
|
Garden Sales, Inc., sells garden supplies. Management is planning its cash needs for the second quarter. The company usually has to borrow money during this quarter to support peak sales of lawn care equipment, which occur during May. The following information has been assembled to assist in preparing a cash budget for the quarter: |
| a. | Budgeted monthly absorption costing income statements for April–July are: |
| April | May | June | July | |||||
| Sales | $ | 600,000 | $ | 900,000 | $ | 500,000 | $ | 400,000 |
| Cost of goods sold | 420,000 | 630,000 | 350,000 | 280,000 | ||||
| Gross margin | 180,000 | 270,000 | 150,000 | 120,000 | ||||
| Selling and administrative expenses: | ||||||||
| Selling expense | 79,000 | 120,000 | 62,000 | 51,000 | ||||
| Administrative expense* | 45,000 | 52,000 | 41,000 | 38,000 | ||||
| Total selling and administrative expenses | 124,000 | 172,000 | 103,000 | 89,000 | ||||
| Net operating income | $ | 56,000 | $ | 98,000 | $ | 47,000 | $ | 31,000 |
| *Includes $20,000 of depreciation each month. |
| b. | Sales are 20% for cash and 80% on account. |
| c. |
Sales on account are collected over a three-month period with 10% collected in the month of sale; 70% collected in the first month following the month of sale; and the remaining 20% collected in the second month following the month of sale. February’s sales totaled $200,000, and March’s sales totaled $300,000. |
| d. |
Inventory purchases are paid for within 15 days. Therefore, 50% of a month’s inventory purchases are paid for in the month of purchase. The remaining 50% is paid in the following month. Accounts payable at March 31 for inventory purchases during March total $126,000. |
| e. |
Each month’s ending inventory must equal 20% of the cost of the merchandise to be sold in the following month. The merchandise inventory at March 31 is $84,000. |
| f. | Dividends of $49,000 will be declared and paid in April. |
| g. | Land costing $16,000 will be purchased for cash in May. |
| h. |
The cash balance at March 31 is $52,000; the company must maintain a cash balance of atleast $40,000 at the end of each month. |
| i. |
The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $200,000. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter. |
| Required: | |
| 1. |
Prepare a schedule of expected cash collections for April, May, and June, and for the quarter in total. |
| 2. |
Prepare the following for merchandise inventory: |
| a. |
A merchandise purchases budget for April, May, and June. |
| b. |
A schedule of expected cash disbursements for merchandise purchases for April, May, and June, and for the quarter in total. |
| 3. |
Prepare a cash budget for April, May, and June as well as in total for the quarter. (Cash deficiency, repayments and interest should be indicated by a minus sign.) |
In: Accounting
Problem 7-22A Cash Budget with Supporting Schedules [LO7-2, LO7-4, LO7-8] Garden Sales, Inc., sells garden supplies. Management is planning its cash needs for the second quarter. The company usually has to borrow money during this quarter to support peak sales of lawn care equipment, which occur during May. The following information has been assembled to assist in preparing a cash budget for the quarter: a. Budgeted monthly absorption costing income statements for April–July are: April May June July Sales $ 660,000 $ 780,000 $ 269,000 $ 440,000 Cost of goods sold 462,000 546,000 188,300 308,000 Gross margin 198,000 234,000 80,700 132,000 Selling and administrative expenses: Selling expense 84,000 113,000 31,500 44,000 Administrative expense* 47,000 78,200 29,800 42,000 Total selling and administrative expenses 131,000 191,200 61,300 86,000 Net operating income $ 67,000 $ 42,800 $ 19,400 $ 46,000 *Includes $18,500 of depreciation each month. b. Sales are 20% for cash and 80% on account. c. Sales on account are collected over a three-month period with 10% collected in the month of sale; 70% collected in the first month following the month of sale; and the remaining 20% collected in the second month following the month of sale. February’s sales totaled $165,000, and March’s sales totaled $265,000. d. Inventory purchases are paid for within 15 days. Therefore, 50% of a month’s inventory purchases are paid for in the month of purchase. The remaining 50% is paid in the following month. Accounts payable at March 31 for inventory purchases during March total $120,400. e. Each month’s ending inventory must equal 20% of the cost of the merchandise to be sold in the following month. The merchandise inventory at March 31 is $92,400. f. Dividends of $33,000 will be declared and paid in April. g. Land costing $41,000 will be purchased for cash in May. h. The cash balance at March 31 is $55,000; the company must maintain a cash balance of atleast $40,000 at the end of each month. i. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $200,000. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter. Required: 1. Prepare a schedule of expected cash collections for April, May, and June, and for the quarter in total. 2. Prepare the following for merchandise inventory: a. A merchandise purchases budget for April, May, and June. b. A schedule of expected cash disbursements for merchandise purchases for April, May, and June, and for the quarter in total. 3. Prepare a cash budget for April, May, and June as well as in total for the quarter. (Cash deficiency, repayments and interest should be indicated by a minus sign.)
In: Accounting
i. Cheaper manufacturing company developed the following data:
Beginning work in process inventory $6000
Direct material used 360,000
Actual overhead 420,000
Overhead applied 405,000
Total manufacturing cost 960,000
Ending work in process 45,000
How much are the direct labour costs for the period?
a. $175,000
b. $195,000
c. $200,000
d. $180,000
ii. What is the production cost report used for?
a. It is an external report provided to shareholders.
b. It shows costs charged to a department and costs accounted for.
c. It shows equivalent units of production but not physical units.
d. It shows the basis on which overhead is allocated.
iii. use the following information: At January 1, 2016, Jake, Inc. has beginning inventory of 4,000 surfboards. Jake estimates it will sell 15,000 units during the first quarter of 2016, with a 10% increase in sales each quarter. Jake’s policy is to maintain an ending inventory equal to 25% of the next quarter’s sales. Each surfboard costs $200 and is sold for $250.
How many units should Jake produce during the first quarter of 2016?
a. 15,125
b. 15,0000
c. 12,500
d. 11,000
In: Accounting
In: Economics
2. Assuming Ricardian equivalence holds, how much would current consumption fall as a result of a one unit increase in government spending, assuming this increase did not affect the real interest rate? What is then the total impact on the demand for goods?
3. Explain in words what the partial expenditure multiplier measures? What does it equal to assuming Ricardian equivalence holds? What about when Ricardian equivalence does not hold?
In: Economics
8. Draw the goods market. Illustrate and explain how the market equilibrium would change under the following circumstances:
a. The U.S. dollar gained value compared to foreign currencies.
b. American corporations have become leaner which means that productivity in the U.S. has increased. Hint: How are prices in the U.S. affected, relative to foreign prices?
c. There is a decrease in transfer payments (ie, items like spending on social programs).
In: Economics