Cash budget-Advanced The actual sales and purchases for Xenocore, Inc., for September and October 2019, along with its forecast sales and purchases for the periodNovember 2019 through April 2020, follow. The firm makes 28% of all sales for cash and collects on 36% of its sales in each of the 2 months following the sale. Othercash inflows are expected to be $11,000 in September and April, $13,000 in January and March, and $27,000 in February. The firm pays cash for 10% of its purchases. Itpays for 53% of its purchases in the following month and for 37% of its purchases 2 months later. Wages and salaries amount to 20% of the preceding month's sales. Rent of$20,000 per month must be paid. Interest payments of $10,000 are due in January and April. A principal payment of $29,000 is also due in April. The firm expects to pay cashdividends of $20,000 in January and April. Taxes of $79,000 are due in April. The firm also intends to make a $25,000 cash purchase of fixed assets in December.a. Assuming that the firm has a cash balance of $23,000 at the beginning of November, determine the end-of-month cash balances for each month, November through April.b. Assuming that the firm wishes to maintain a $15,000 minimum cash balance, determine the required total financing or excess cash balance for each month, Novemberthrough April.c. If the firm were requesting a line of credit to cover needed financing for the period November to April, how large would this line have to be? Explain your answer.More info(Click on the icon herea spreadsheet.)Year20192019201920192020202020202020in order to copy the contents of the data table below intoMonthSeptemberOctoberNovemberDecemberJanuaryFebruaryMarchAprilPrintSales$213,000250,000174,000161,000142,000180,000205,000254,000DonePurchases$117,000153,000140,000101,00084,000115,00097,00087,000

Budgeting: It is a process of planning the work to be performed. Under this process, a formal plan…

a. Assuming that the firm has a cash balance of $23,000 at the beginning of November, determine the end-of-month cash balances for each month, November through April. b. Assuming that the firm wishes to maintain a $15,000 minimum cash balance, determine the required total financing or excess cash balance for each month, November through April. c. If the firm were requesting a line of credit to cover needed financing for the period November to April, how large would this line have to be? Explain your answer.

a. Assuming that the firm has a cash balance of $23,000 at the beginning of November, determine the end-of-month cash balances for each month, November through April. b. Assuming that the firm wishes to maintain a $15,000 minimum cash balance, determine the required total financing or excess cash balance for each month, November through April. c. If the firm were requesting a line of credit to cover needed financing for the period November to April, how large would this line have to be? Explain your answer.

Fundamentals Of Financial Management, Concise Edition (mindtap Course List)

10th Edition

ISBN:9781337902571

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter15: Working Capital Management

Section: Chapter Questions

Problem 10P: CASH BUDGETING Helen Bowers, owner of Helens Fashion Designs, is planning to request a line of...

See similar textbooks

Related questions

Q: Each business day, on average, a company writes checks totaling $35,000 to pay its suppliers. The…

A: Disbursement float is the delay of time between of writting the check and reduction in the amount in…

Q: For the months of January and February, Crane Ltd. recorded cash deposits in its books of $5,100 and…

A: Given that there are no deposits in transit at the beginning of January. Cash deposit in January and…

Q: Helen Bowers, owner of Helen's Fashion Design, is planning to request a line of credit from her…

A: Cash budget of the business shows expected cash receipts and cash disbursements in particular period…

Q: Harrah Company provided the following information for the month of October: Beginning cash balance $…

A: Cash equivalents are high-credit-quality, high-liquidity financial vehicles suited for short-term…

Q: The following are excerpts from the financial statements of 2018 and 2019 of Mandela Corporation.…

A: Accounts receivable turnover states how many times the company is the company receiving its credit…

Q: correct cash balance at the end of the month

A: The bank balance as per bank statement should be correctly reconciled to the balance in books to…

Q: Each business day, on average, a company writes checks totaling $37,500 to pay its suppliers. The…

A: A. Disbursement float=check written×number of days to clear=$37500×6=$225,000 collection float=check…

Q: Each business day, on average, a company writes check totaling $38,500 to pay its suppliers. The…

A: The float discuss about the money within the banking system. Due to time gaps in registering a…

Q: The following are excerpts from the financial statements of 2018 and 2019 of Mandela Corporation.…

A: 1. Accounts Receivable Turnover ratio= Net sales/Average Accounts receivable 2.No. Of days sales…

Q: Kayak requires a minimum cash balance of $40,000 at each month-end. Loans taken to meet this…

A: Cash budget is a statement that shows estimated cash receipts and cash payments for a particular…

Q: Prime Products hopes to borrow $51,000 on April 1 and repay it plus interest of $860 on June 30. The…

A: Cash Budget: Cash Budget is a schedule to record cash inflows and outflows over a period with a view…

Q: a. On April 1, the start of the loan period, the cash balance will be $18,800. Accounts receivable…

A: A cash budget is a budget that provides information about the company's projected cash inflows and…

Q: Use the following information which relates to ABC Limited to answer the questions which follow:…

A: Budgeting is a method of estimating expected future outcomes based on past events. Budgeting…

Q: You are a Corporate Credit Analyst for your bank. A new corporate customer in the manufacturing…

A: Liquidity means the availability of liquid assets. Liquid assets mean assets that can easily be…

Q: Each business day, on average, a company writes checks totaling $41,000 to pay its suppliers. The…

A: Writes checks Total = $41000 Checks clearing Time = 3 days Company receiving from customer = $52000…

Q: If Service World has $1,950 cash, $400 of government Treasury bills purchased last month with a…

A: The cash equivalents include the items that can be converted into cash within 90 days. The cash and…

Q: Sequola Furniture Company's sales over the past three months, half of which are for cash, were as…

A: Accounts receivable are the funds owed by customers to a business for products or services received…

Concept explainers

Master Budget

A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.

Sales Budget and Selling

A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.

Question

Cash budget-Advanced The actual sales and purchases for Xenocore, Inc., for September and October 2019, along with its forecast sales and purchases for the period
November 2019 through April 2020, follow. The firm makes 28% of all sales for cash and collects on 36% of its sales in each of the 2 months following the sale. Other
cash inflows are expected to be $11,000 in September and April, $13,000 in January and March, and $27,000 in February. The firm pays cash for 10% of its purchases. It
pays for 53% of its purchases in the following month and for 37% of its purchases 2 months later. Wages and salaries amount to 20% of the preceding month's sales. Rent of
$20,000 per month must be paid. Interest payments of $10,000 are due in January and April. A principal payment of $29,000 is also due in April. The firm expects to pay cash
dividends of $20,000 in January and April. Taxes of $79,000 are due in April. The firm also intends to make a $25,000 cash purchase of fixed assets in December.
a. Assuming that the firm has a cash balance of $23,000 at the beginning of November, determine the end-of-month cash balances for each month, November through April.
b. Assuming that the firm wishes to maintain a $15,000 minimum cash balance, determine the required total financing or excess cash balance for each month, November
through April.
c. If the firm were requesting a line of credit to cover needed financing for the period November to April, how large would this line have to be? Explain your answer.
More info
(Click on the icon here
a spreadsheet.)
Year
2019
2019
2019
2019
2020
2020
2020
2020
in order to copy the contents of the data table below into
Month
September
October
November
December
January
February
March
April
Print
Sales
$213,000
250,000
174,000
161,000
142,000
180,000
205,000
254,000
Done
Purchases
$117,000
153,000
140,000
101,000
84,000
115,000
97,000
87,000

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Cash Budget brief introduction

VIEW

Step 2: Preparation of Cash Budget

VIEW

Solution

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Cash budget Pasadena Candle Inc. pays 40% of its purchases on account in the month of the purchase and 60% in the month following the purchase. If purchases are budgeted to be 40,000 for August and 36,000 for September, what are the budgeted cash payments for purchases on account for September?
Cash budget The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information: The company expects to sell about 10% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month following the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent 50,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in January, and the annual property taxes are paid in December. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month. Current assets as of September 1 include cash of 40,000, marketable securities of 75,000, and accounts receivable of 300,000 (60,000 from July sales and 240,000 from August sales). Sales on account for July and August were 200,000 and 240,000, respectively. Current liabilities as of September 1 include 40,000 of accounts payable incurred in August for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of 55,000 will be made in October. Bridgeports regular quarterly dividend of 25,000 is expected to be declared in October and paid in November. Management desires to maintain a minimum cash balance of 50,000. Instructions Prepare a monthly cash budget and supporting schedules for September, October, and November. On the basis of the cash budget prepared in part (1), what recommendation should be made to the controller?
Cash budget The controller of Mercury Shoes Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information: The company expects to sell about 10% of its merchandise for cash. Of sales on account, 60% are expected to be collected in the month following the sale and the remainder the following month (second month after sale). Depreciation, insurance, and property tax expense represent 12,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in February, and the annual property taxes are paid in November. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month. Current assets as of June 1 include cash of 42,000, marketable securities of 25,000, and accounts receivable of 198,000 (150,000 from May sales and 48,000 from April sales). Sales on account in April and May were 120,000 and 150,000, respectively. Current liabilities as of June 1 include 13,000 of accounts payable incurred in May for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of 24,000 will be made in July. Mercury Shoes regular quarterly dividend of 15,000 is expected to be declared in July and paid in August. Management desires to maintain a minimum cash balance of 40,000. Instructions Prepare a monthly cash budget and supporting schedules for June, July, and August. On the basis of the cash budget prepared in part (1), what recommendation should be made to the controller?
A companys sales for the coming months are as follows: About 20 percent of sales are cash sales, and the remainder are credit sales. The company finds that typically 10 percent of a months credit sales are paid in the month of sale, 70 percent are paid the next month, and 15 percent are paid in the second month after sale. Expected cash receipts in July are budgeted at what amount? a. 114,520 b. 143,150 c. 145,720 d. 156,000
Relevant data from the Poster Companys operating budgets are: Additional data: Capital assets were sold in January for $10,000 and $4,500 in May. Dividends of $4,500 were paid in February. The beginning cash balance was $60,359 and a required minimum cash balance is $59,000. Use this information to prepare a cash budget for the first two quarters of the year
Operating Budget, Comprehensive Analysis Allison Manufacturing produces a subassembly used in the production of jet aircraft engines. The assembly is sold to engine manufacturers and aircraft maintenance facilities. Projected sales in units for the coming 5 months follow: The following data pertain to production policies and manufacturing specifications followed by Allison Manufacturing: a. Finished goods inventory on January 1 is 32,000 units, each costing 166.06. The desired ending inventory for each month is 80% of the next months sales. b. The data on materials used are as follows: Inventory policy dictates that sufficient materials be on hand at the end of the month to produce 50% of the next months production needs. This is exactly the amount of material on hand on December 31 of the prior year. c. The direct labor used per unit of output is 3 hours. The average direct labor cost per hour is 14.25. d. Overhead each month is estimated using a flexible budget formula. (Note: Activity is measured in direct labor hours.) e. Monthly selling and administrative expenses are also estimated using a flexible budgeting formula. (Note: Activity is measured in units sold.) f. The unit selling price of the subassembly is 205. g. All sales and purchases are for cash. The cash balance on January 1 equals 400,000. The firm requires a minimum ending balance of 50,000. If the firm develops a cash shortage by the end of the month, sufficient cash is borrowed to cover the shortage. Any cash borrowed is repaid at the end of the quarter, as is the interest due (cash borrowed at the end of the quarter is repaid at the end of the following quarter). The interest rate is 12% per annum. No money is owed at the beginning of January. Required: 1. Prepare a monthly operating budget for the first quarter with the following schedules. (Note: Assume that there is no change in work-in-process inventories.) a. Sales budget b. Production budget c. Direct materials purchases budget d. Direct labor budget e. Overhead budget f. Selling and administrative expenses budget g. Ending finished goods inventory budget h. Cost of goods sold budget i. Budgeted income statement j. Cash budget 2. CONCEPTUAL CONNECTION Form a group with two or three other students. Locate a manufacturing plant in your community that has headquarters elsewhere. Interview the controller for the plant regarding the master budgeting process. Ask when the process starts each year, what schedules and budgets are prepared at the plant level, how the controller forecasts the amounts, and how those schedules and budgets fit in with the overall corporate budget. Is the budgetary process participative? Also, find out how budgets are used for performance analysis. Write a summary of the interview.
The sales department of Macro Manufacturing Co. has forecast sales for its single product to be 20,000 units for June, with three-quarters of the sales expected in the East region and one-fourth in the West region. The budgeted selling price is 25 per unit. The desired ending inventory on June 30 is 2,000 units, and the expected beginning inventory on June 1 is 3,000 units. Prepare the following: a. A sales budget for June. b. A production budget for June.
Budgeted income statement and balance sheet As a preliminary to requesting budget estimates of sales, costs, and expenses for the fiscal year beginning January 1, 20Y9, the following tentative trial balance as of December 31, 20Y8, is prepared by the Accounting Department of Regina Soap Co.: Factory output and sales for 20Y9 are expected to total 200,000 units of product, which are to be sold at 5.00 per unit. The quantities and costs of the inventories at December 31, 20Y9, are expected to remain unchanged from the balances at the beginning of the year. Budget estimates of manufacturing costs and operating expenses for the year are summarized as follows: Balances of accounts receivable, prepaid expenses, and accounts payable at the end of the year are not expected to differ significantly from the beginning balances. Federal income tax of 30,000 on 20Y9 taxable income will be paid during 20Y9. Regular quarterly cash dividends of 0.15 per share are expected to be declared and paid in March, June, September, and December on 18,000 shares of common stock outstanding. It is anticipated that fixed assets will be purchased for 75,000 cash in May. Instructions Prepare a budgeted income statement for 20Y9. Prepare a budgeted balance sheet as of December 31, 20Y9, with supporting calculations.
Echo Amplifiers prepared the following sales budget for the first quarter of 2018: It also has this additional information related to its expenses: Prepare a sales and administrative expense budget for each month in the quarter ending March 31, 2018.
Cash Budget The controller of Feinberg Company is gathering data to prepare the cash budget for July. He plans to develop the budget from the following information: a. Of all sales, 40% are cash sales. b. Of credit sales, 45% are collected within the month of sale. Half of the credit sales collected within the month receive a 2% cash discount (for accounts paid within 10 days). Thirty percent of credit sales are collected in the following month; remaining credit sales are collected the month thereafter. There are virtually no bad debts. c. Sales for the second two quarters of the year follow. (Note: The first 3 months are actual sales, and the last 3 months are estimated sales.) d. The company sells all that it produces each month. The cost of raw materials equals 26% of each sales dollar. The company requires a monthly ending inventory of raw materials equal to the coming months production requirements. Of raw materials purchases, 50% is paid for in the month of purchase. The remaining 50% is paid for in the following month. e. Wages total 105,000 each month and are paid in the month incurred. f. Budgeted monthly operating expenses total 376,000, of which 45,000 is depreciation and 6,000 is expiration of prepaid insurance (the annual premium of 72,000 is paid on January 1). g. Dividends of 130,000, declared on June 30, will be paid on July 15. h. Old equipment will be sold for 25,200 on July 4. i. On July 13, new equipment will be purchased for 173,000. j. The company maintains a minimum cash balance of 20,000. k. The cash balance on July 1 is 27,000. Required: Prepare a cash budget for July. Give a supporting schedule that details the cash collections from sales.
Cash budget-Advanced The actual sales and purchases for Xenocore, Inc., for September and October 2019, along with its forecast sales and purchases for the period November 2019 through April 2020, follow. The firm makes 16% of all sales for cash and collects on 42% of its sales in each of the 2 months following the sale. Other cash inflows are expected to be $10,000 in September and April, $17,000 in January and March, and $28,000 in February. The firm pays cash for 12% of its purchases. It pays for 48% of its purchases in the following month and for 40% of its purchases 2 months later. Wages and salaries amount to 22% of the preceding month's sales. Rent of $19,000 per month must be paid. Interest payments of $9,000 are due in January and April. A principal payment of $29,000 is also due in April. The firm expects to pay cash dividends of $18,000 in January and April. Taxes of $83,000 are due in April. The firm also intends to make a $25,000 cash purchase of fixed assets in December.…
Cash budgetlong dashAdvanced The actual sales and purchases for Xenocore, Inc., for September and October 2019, along with its forecast sales and purchases for the period November 2019 through April 2020, (follow DATA below )... The firm makes 16 % of all sales for cash and collects on 42 % of its sales in each of the 2 months following the sale. Other cash inflows are expected to be $ 12, 000 in September and April, $ 13 comma 000 in January and March, and $ 28,000 in February. The firm pays cash for 11 % of its purchases. It pays for 53 % of its purchases in the following month and for 36% of its purchases 2 months later. Wages and salaries amount to 19 % of the preceding month's sales. Rent of $ 18 comma 000 per month must be paid. Interest payments of $ 11 comma 000 are due in January and April. A principal payment of $ 27,000 is also due in April. The firm expects to pay cash dividends of $ 21,000 in January and April. Taxes of $ 82 comma 000 are due in April. The firm also…