Flounder, Inc. has budgeted sales revenues as follows: Credit sales Cash sales Total sales June June $139,000 98,000 $237,000 $383,000 $ 295,000 July August July $129,000 $300,000 222,000 102,000 254,000 Past experience indicates that 60% of the credit sales will be collected in the month of sale and the remaining 40% will be collected in the following month. Purchases of inventory are all on account with 50% is paid in the month of purchase and 50% paid in the month following purchase. Budgeted inventory purchases are as follows: August $ 95,000 200,000 Other cash disbursements budgeted: (a) selling and administrative expenses of $51,000 each month, (b) dividends of $105,000 will be paid in July, and (c) purchase of equipment in August for $34,000 cash. The company's policy is to maintain a minimum cash balance of $50,000 at the end of each month. The company borrows money from the bank at 6% 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 July 1 was $50,000. Assume that borrowed money in this case is for one month.

Flounder, Inc. has budgeted sales revenues as follows: Credit sales Cash sales Total sales June June $139,000 98,000 $237,000 $383,000 $ 295,000 July August July $129,000 $300,000 222,000 102,000 254,000 Past experience indicates that 60% of the credit sales will be collected in the month of sale and the remaining 40% will be collected in the following month. Purchases of inventory are all on account with 50% is paid in the month of purchase and 50% paid in the month following purchase. Budgeted inventory purchases are as follows: August $ 95,000 200,000 Other cash disbursements budgeted: (a) selling and administrative expenses of $51,000 each month, (b) dividends of $105,000 will be paid in July, and (c) purchase of equipment in August for $34,000 cash. The company's policy is to maintain a minimum cash balance of $50,000 at the end of each month. The company borrows money from the bank at 6% 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 July 1 was $50,000. Assume that borrowed money in this case is for one month.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Jacob Long, the controller of Arvada Corporation, is trying to prepare a sales budget for the coming year. The income statements for the last four quarters follow: Sales revenue Cost of goods sold Gross profit Selling & administrative expenses Net income First Quarter $176,000 105,600 70,400 17,600 $ 52,800 Second Quarter $206,000 123,600 82,400 20,600 $ 61,800 Third Quarter $216,000 129,600 86,400 21,600 $ 64,800 Fourth Quarter $266,000 159,600 106,400 26,600 $ 79,800 Total $864,000 518,400 345,600 86,400 $259,200 Historically, cost of goods sold is about 60 percent of sales revenue. Selling and administrative expenses are about 10 percent of sales revenue. Fred Arvada, the chief executive officer, told Mr. Long that he expected sales next year to be 15 percent for each respective quarter above last year's level. However, Rita Banks, the vice president of sales, told Mr. Long that she believed sales growth would be only 10 percent. Required a. Prepare a pro forma income statement…
Dove Corporation began its operations on September 1 of the current year. Budgeted sales for the first three months of business are $250,000, $300,000, and $406,000, respectively, for September, October, and November. The company expects to sell 25% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month of the sale and 30% in the month following the sale. The cash collections in November are a.$101,500 b.$382,150 c.$213,150 d.$458,580
Nestee controller for Mactan Relaters has assembled the following data to assist in the preparation of a cash budget for the third quarter of 2021: Sales- May $100,000 ;June $120,000; July $90,000 ; August $100,000 September $135,000; October $110,000 Each month, 30% of sales are for cash and 70% ore on credit. The collection pattern for credit sales is 20% in the month of sale, 50% in the following month, and 30% in the second month following the sale. Each month the ending inventory exactly equals 50% of the cost of next month's sales. The markup on goods is 25% of cost. Inventory purchases are paid in the month following the purchase. Monthly expenses are as follows: Salaries and wages $10,000; Depreciation $4,000; Utlites $1,000; Other $1,700. Property taxes of $15,000 are due and payable on July 15,2021. Advertising fees of $6,000 must be paid on August 20,2021. A lease on a new storage facility is scheduled to begin on September 2, 2021.Monthly payments are $5,000. The…
A company has 30% of its sales for cash and 70% of its sales on credit. All credit sales are fully collected in the first month after the sale. Budgeted sales are $60,200 for January, $84,200 for February, and $108,200 for March. December sales were $50,200. Prepare a schedule of cash receipts from sales for January, February, and March. Sales Cash receipts from: Cash sales Collections of prior period sales. Total cash receipts $ 60,200 $ February 84,200 $ 108,200
The Panda Company has budgeted its activity for October according to the following information: Sales are budgeted at $392,000 and all sales are for cash. All purchases of merchandise inventory are for cash. Merchandise inventory was $150,000 on September 30 and the planned merchandise inventory on October 31 is $140,000. All merchandise is sold at 40% above cost. The selling and administrative expenses are budgeted at $92,000 for the month. All of these expenses are paid for in cash except for depreciation of $12,000. What is the budgeted net income for October?
Nuthatch Corporation began its operations on September 1 of the current year. Budgeted sales for the first three months of business September, October, and November are $239,000, $319,000, and $424,000, respectively. The company expects to sell 30% of its merchandise for cash. Of sales on account, 80% are expected to be collected in the month of the sale and 20% in the month following the sale. The cash collections expected in November from accounts receivable are projected to be: Ca. $338,520 Ob. $282,100 Oc. $237,440 Od. $192,780
Cullumber Design provided the following budgeted information for April through July: April May June July Projected sales $133120 $157440 $147200 $168960 Projected merchandise purchases $104960 $117760 $99840 $84480 The cash balance on June 1 is $15360. The company pays 40% of merchandise purchases in the month purchased and 60% in the following month. General operating expenses are budgeted to be $39680 per month of which depreciation is $3840 of this amount. Management pays operating expenses in the month incurred. The company makes loan payments of $5120 per month of which $768 is interest and the remainder is principal. How much are budgeted cash disbursements for June? O $110592. O $151552. O $131584. O $80896.
Cloudy Company had the following historical collection pattern for its credit sales: 70% collected in the month of sale 12% collected in the first month after month of sale 10% collected in the second month after month of sale 5% collected in the third month after month of sale 3% uncollectible The sales on open account (credit sales) have been budgeted for the last six months of the year as shown below: July August September October November December The estimated cash collection by Cloudy Company during September from credit sales in July, August, and September is: Multiple Choice $83,840. $100,160. $90,880. $ 92,000 $ 104,000 $ 116,000 $ 128,000 $ 140,000 $ 122,000 $64,400.
Timpco, a retailer, makes both cash and credit sales (i.e., sales on open account). Information regarding budgeted sales for the last quarter of the year is as follows: OctoberNovemberDecemberCash sales$ 60,000$ 55,000$ 75,000Credit sales60,00066,00082,500Total$ 120,000$ 121,000$ 157,500 Past experience shows that 5% of credit sales are uncollectible. Of the credit sales that are collectible, 60% are collected in the month of sale; the remaining 40% are collected in the month following the month of sale. Customers are granted a 1.5% discount for payment within 10 days of billing. Approximately 75% of collectible credit sales take advantage of the cash discount. Inventory purchases each month are 100% of the cost of the following month’s projected sales. (The gross profit rate for Timpco is approximately 30%.) All merchandise purchases are made on credit, with 20% paid in the month of purchase and the remainder paid in the following month. No cash discounts for early payment are…
Nuthatch Corporation began its operations on September 1 of the current year. Budgeted sales for the first three months of business September, October, and November are $245,000, $311,000, and $413,000, respectively. The company expects to sell 30% of its merchandise for cash. Of sales on account, 80% are expected to be collected in the month of the sale and 20% in the month following the sale. The cash collections expected in November from accounts receivable are projected to be: a. $231,280 O b. $187,740 Oc. $329,784 Od. $274,820
Kingston budgets total sales for June and July of $430,000 and $338,000, respectively. Cash sales are 65% of total sales. Of the credit sales, 25% are collected in the month of sale, 65% are collected during the first month after the sale, and the remaining 10% are collected in the second month after the sale. Determine the amount of accounts receivable reported on the company’s budgeted balance sheet as of July 31. Hint: Determine the percent of June and July sales that are uncollected at July 31. As of July 31 Sales month Total Sales Credit Sales Percent Uncollected Amount Uncollected June $430,000 July 338,000 Total
ABC Store. has budgeted sales for June and July at $690,000 and $720,000, respectively. Sales are 90% credit, of which 70% is collected in the month of sale and 30% is collected in the following month. What are the cash collections in July.