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sales. om. Jada Mcheon Jound CASH BUDGET The MoBay Corporation`s projected sales for the first eight months of 2014 are as follows: January February 120,000 April May 240,000 300,000 June 270,000 July August 225,000 150,000 Of MoBay's sales, 10 percent is for cash, another 60 percent is collected in the month following sale, and 30 percent is collected in the second month following sale. November and December sales for 2003 were $220,000 and $175,000, respectively. MoBay purchases its raw materials two months in advance of its sales equal to 60 percent of their final sales price. The supplier is paid one month after it makes delivery. For example, purchases for April sales are made in February and payment is made in March. In addition, MoBay pays $10,000 per month for rent and $20,000 each month for other expenditures. Tax prepayments of $22,500 are made each quarter, beginning in March. The company's cash balance at December 31, 2003, was $22,000; a minimum balance of $15,000 must be maintained at all times. Assume that any short-term financing needed to maintain the cash balance is paid off in the month following the month of financing if sufficient funds are available. Interest on short-term loans (12 percent) is paid monthly. Borrowing to meet estimated monthly cash needs takes place at the beginning of the month. Required: a. Prepare a cash collection schedule and a Payment schedule for the b. Prepare a cash budget for the MoBay Corporation covering the first four months of 2014. company

sales. om. Jada Mcheon Jound CASH BUDGET The MoBay Corporation`s projected sales for the first eight months of 2014 are as follows: January February 120,000 April May 240,000 300,000 June 270,000 July August 225,000 150,000 Of MoBay's sales, 10 percent is for cash, another 60 percent is collected in the month following sale, and 30 percent is collected in the second month following sale. November and December sales for 2003 were $220,000 and $175,000, respectively. MoBay purchases its raw materials two months in advance of its sales equal to 60 percent of their final sales price. The supplier is paid one month after it makes delivery. For example, purchases for April sales are made in February and payment is made in March. In addition, MoBay pays $10,000 per month for rent and $20,000 each month for other expenditures. Tax prepayments of $22,500 are made each quarter, beginning in March. The company's cash balance at December 31, 2003, was $22,000; a minimum balance of $15,000 must be maintained at all times. Assume that any short-term financing needed to maintain the cash balance is paid off in the month following the month of financing if sufficient funds are available. Interest on short-term loans (12 percent) is paid monthly. Borrowing to meet estimated monthly cash needs takes place at the beginning of the month. Required: a. Prepare a cash collection schedule and a Payment schedule for the b. Prepare a cash budget for the MoBay Corporation covering the first four months of 2014. company

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter8: Budgeting For Planning And Control
Section: Chapter Questions
Problem 11CE: Shalimar Company manufactures and sells industrial products. For next year, Shalimar has budgeted...
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sales. om. Jada Mcheon Jound CASH BUDGET The MoBay Corporation`s projected sales for the first eight months of 2014 are as follows: January February 120,000 April May 240,000 300,000 June 270,000 July August 225,000 150,000 Of MoBay's sales, 10 percent is for cash, another 60 percent is collected in the month following sale, and 30 percent is collected in the second month following sale. November and December sales for 2003 were $220,000 and $175,000, respectively. MoBay purchases its raw materials two months in advance of its sales equal to 60 percent of their final sales price. The supplier is paid one month after it makes delivery. For example, purchases for April sales are made in February and payment is made in March. In addition, MoBay pays $10,000 per month for rent and $20,000 each month for other expenditures. Tax prepayments of $22,500 are made each quarter, beginning in March. The company's cash balance at December 31, 2003, was $22,000; a minimum balance of $15,000 must be maintained at all times. Assume that any short-term financing needed to maintain the cash balance is paid off in the month following the month of financing if sufficient funds are available. Interest on short-term loans (12 percent) is paid monthly. Borrowing to meet estimated monthly cash needs takes place at the beginning of the month. Required: a. Prepare a cash collection schedule and a Payment schedule for the b. Prepare a cash budget for the MoBay Corporation covering the first four months of 2014. company
Transcribed Image Text:sales. om. Jada Mcheon Jound CASH BUDGET The MoBay Corporation`s projected sales for the first eight months of 2014 are as follows: January February 120,000 April May 240,000 300,000 June 270,000 July August 225,000 150,000 Of MoBay's sales, 10 percent is for cash, another 60 percent is collected in the month following sale, and 30 percent is collected in the second month following sale. November and December sales for 2003 were $220,000 and $175,000, respectively. MoBay purchases its raw materials two months in advance of its sales equal to 60 percent of their final sales price. The supplier is paid one month after it makes delivery. For example, purchases for April sales are made in February and payment is made in March. In addition, MoBay pays $10,000 per month for rent and $20,000 each month for other expenditures. Tax prepayments of $22,500 are made each quarter, beginning in March. The company's cash balance at December 31, 2003, was $22,000; a minimum balance of $15,000 must be maintained at all times. Assume that any short-term financing needed to maintain the cash balance is paid off in the month following the month of financing if sufficient funds are available. Interest on short-term loans (12 percent) is paid monthly. Borrowing to meet estimated monthly cash needs takes place at the beginning of the month. Required: a. Prepare a cash collection schedule and a Payment schedule for the b. Prepare a cash budget for the MoBay Corporation covering the first four months of 2014. company
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