Blossom Bakery has budgeted sales revenues as follows: Credit sales Cash sales Total sales April $45,900 12,240 $58,140 May $48,960 16,320 $65,280 Past experience indicates that 40% of the credit sales will be collected in the month of sale, and the remaining 60% will be collected in the following month. Purchases of inventory are all on credit, and 20% will be paid in the month of purchase with the balance paid in the month following purchase. Budgeted inventory purchases are: April $34,680 May 37,740 Other budgeted amounts include: (a) selling and administrative expenses of $25,296 each month and (b) dividends of $8,364 to be paid in May. Included in the selling and administrative expenses is depreciation expense of $1,938. The company wishes to maintain a minimum cash balance of $4,080 at the end of each month. The company borrows money from the bank at 4% interest if necessary to maintain the minimum cash balance. Borrowed money is repaid in months when there is an excess cash balance. The beginning cash balance on May 1 was $4,590. Money is borrowed in $102 increments.

Blossom Bakery has budgeted sales revenues as follows: Credit sales Cash sales Total sales April $45,900 12,240 $58,140 May $48,960 16,320 $65,280 Past experience indicates that 40% of the credit sales will be collected in the month of sale, and the remaining 60% will be collected in the following month. Purchases of inventory are all on credit, and 20% will be paid in the month of purchase with the balance paid in the month following purchase. Budgeted inventory purchases are: April $34,680 May 37,740 Other budgeted amounts include: (a) selling and administrative expenses of $25,296 each month and (b) dividends of $8,364 to be paid in May. Included in the selling and administrative expenses is depreciation expense of $1,938. The company wishes to maintain a minimum cash balance of $4,080 at the end of each month. The company borrows money from the bank at 4% interest if necessary to maintain the minimum cash balance. Borrowed money is repaid in months when there is an excess cash balance. The beginning cash balance on May 1 was $4,590. Money is borrowed in $102 increments.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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