Problem 8.37Cash Budget, Pro Forma Balance SheetObjective 3 - Identify the components of the financial budget, and prepare acash budget.Bernard Creighton is the controller for Creighton Hardware Store. In puttingtogether the cash budget for the fourth quarter of the year, he has assembledthe following data.a. Sales$100,000July (actual)August (actual)September (estimated)October (estimated)120,00090,000November (estimated)December (estimated)100,000135,000150,000b. Each month, 20 percent of sales are for cash, and 80 percent are oncredit. The collection pattern for credit sales is 20 percent in the monthof sale, 50 percent in the following month, and 30 percent in the secondmonth following the sale.c. Each month, the ending inventory exactly equals 40 percent of the costof next month's sales. The markup on goods is 33.33 percent of cost.d. Inventory purchases are paid for in the month following purchase.e. Recurring monthly expenses are as follows:Salaries and wagess10,000Depreciation on plant and equipmentUtilities4,0001,000Other1,700 f. Property taxes of $15,000 are due and payable on September 15.g Advertising fees of $6,000 must be paid on October 20.h. A lease on a new storage facility is scheduled to begin on November 2.Monthly payments are $5,000.i The company has a policy to maintain a minimum cash balance of$10,000. If necessary, it will borrow to meet its short-lerm needs. Allborrowing is done at the beginning of the month. All payments onprincipal and interest are made at the end of the month. The annualinterest rate is 9 percent. The company must borrow in multiples of$1,000.LA partially completed balance sheet as of August 31 is given below.(Accounts payable is for inventory purchases only.)Liabilities &AssetsOwners' EquityCashAccounts receivableInventoryPlant and equipmentAccounts payable431,750Common stock220,000268,750Retained earningsTotalsRequired:1. Complete the balance sheet given in part ().2 Bernard wants to see how the company is doing prior to starting the month ofDecember. Prepare a cash budget for the months of September, October, andNovember and for the three-month period in total (the period begins onSeptember 1). Provide a supporting schedule of cash collections.3. Prepare a pro forma balance sheet as of November 30.

(a) The balance sheet represents the financial position of the company. It includes assets,…

Cash Budget, Pro Forma Balance Sheet Objective 3 - Identify the components of the financial budget, and prepare a cash budget. Bernard Creighton is the controller for Creighton Hardware Store. In putting together the cash budget for the fourth quarter of the year, he has assembled the following data. a. Sales July (actual) August (actual) September (estimated) October (estimated) November (estimated) December (estimated) $100,000 120,000 90,000 100,000 135,000 150,000

Cash Budget, Pro Forma Balance Sheet Objective 3 - Identify the components of the financial budget, and prepare a cash budget. Bernard Creighton is the controller for Creighton Hardware Store. In putting together the cash budget for the fourth quarter of the year, he has assembled the following data. a. Sales July (actual) August (actual) September (estimated) October (estimated) November (estimated) December (estimated) $100,000 120,000 90,000 100,000 135,000 150,000

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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Cash Budget LeeAnn Ortiz owns a retail store that sells new and used sporting equipment. LeeAnn has requested a cash budget for October. After examining the records of the company, you find the following: Cash balance on October 1 is $1,110. Actual sales for August and September are as follows: August September Cash sales $6,000 $4,500 Credit sales 58,000 61,000 Total sales $64,000 $65,500 Credit sales are collected over a three-month period: 40 percent in the month of sale, 36 percent in the next month, and 22 percent in the second month after the sale. The remaining sales are uncollectible. Inventory purchases average 70 percent of a month's total sales. Of those purchases, 45 percent are paid for in the month of purchase. The remaining 55 percent are paid for in the following month. Salaries and wages total $3,850 per month. Rent is $3,150 per month. Taxes to be paid in October are $1,635. LeeAnn usually withdraws $3,500…
Assume a merchandising company provides the following information from its master budget for the month of May: Sales Cost of goods sold Selling and administrative expenses Accounts receivable, May 1st Accounts receivable, May 31st If all of the company's sales are on account, what is the amount of cash collections from customers included in the cash budget for May? Multiple Choice $109,000 $106,000 $129,000 $ 125,000 $ 90,000 $ 24,000 $ 16,000 $ 35,000 $125,000
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Budget in Service Company (Cash Budget) Edge Soccer Program (Edge) began the year with a cash balance of $10,500. The budget forecasts that collections from customers owed to the company will be $11,000 in January and $15,200 in February. The soccer program is also supposed to receive $8,500 in January on a note receivable from a soccer club that owes Edge for training. Edge plans to purchase soccer equipment in January and February with cash. The budgeted amounts of the purchases are $15,600 in January and $14,800 in February. Operating costs for the business is $2900 per month. Edge must maintain a minimum cash balance of $10,000 in their bank account at all times. If the amount in the bank account falls below $10,000, then bank extends credit to Edge immediately in multiples of $1000. Edge pays back any amounts borrowed each quarter in payments of $2000 plus 4% interest. The first payment occurs three (3) months after the bank has extended edge credit. Requirement Prepare a cash…
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