Forest Trails is preparing their budgeted financial statements for the coming period, and has accumulated the following data: Beginning-of-period balances: Cash: $13,500 Accounts Receivable: $54,000 Raw Materials Inventory: $16,000 Work in Process Inventory: $60,000 Finished Goods Inventory: $24,000 Equipment (historical value): $480,000 Accumulated Depreciation: $288,000 Accounts Payable: $27,000 Estimates for end-of-period balances: Accounts Receivable: $67,500 Raw Materials Inventory: $10,000 Work in Process Inventory: $50,000 Finished Goods Inventory: $29,000 Accumulated Depreciation: $296,000 Accounts Payable: $18,000 Budgeted activity levels for the period: Sales: 3,125 units, at an average sales price of $80/unit Purchases of Direct Materials: $44,800 Direct Labor Wages: $75,000 Manufacturing Overhead: $25,000 Selling and Administrative Expenses: $42,000 All sales are on account. Only raw materials are purchased on account. The company has no debt aside from current liabilities. Forest Trails has planned to purchase new equipment worth $25,000, and to sell equipment for $8,000 (Original purchase price $15,000, accumulated depreciation $10,000) to help finance the purchase. What is the budgeted level of Cash Flow from Operating Activities? Select one: a. $58,700 positive cash flow b. $72,000 positive cash flow c. $63,200 positive cash flow d. $73,200 positive cash flow e. None of the above

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Forest Trails is preparing their budgeted financial statements for the coming period, and has accumulated the following data:

Beginning-of-period balances:

Cash: $13,500

Accounts Receivable: $54,000

Raw Materials Inventory: $16,000

Work in Process Inventory: $60,000

Finished Goods Inventory: $24,000

Equipment (historical value): $480,000

Accumulated Depreciation: $288,000

Accounts Payable: $27,000

Estimates for end-of-period balances:

Accounts Receivable: $67,500

Raw Materials Inventory: $10,000

Work in Process Inventory: $50,000

Finished Goods Inventory: $29,000

Accumulated Depreciation: $296,000

Accounts Payable: $18,000

Budgeted activity levels for the period:

Sales: 3,125 units, at an average sales price of $80/unit

Purchases of Direct Materials: $44,800

Direct Labor Wages: $75,000

Manufacturing Overhead: $25,000

Selling and Administrative Expenses: $42,000

All sales are on account. Only raw materials are purchased on account. The company has no debt aside from current liabilities. Forest Trails has planned to purchase new equipment worth $25,000, and to sell equipment for $8,000 (Original purchase price $15,000, accumulated depreciation $10,000) to help finance the purchase.

What is the budgeted level of Cash Flow from Operating Activities?

 

 

Select one:

a. $58,700 positive cash flow

b. $72,000 positive cash flow

c. $63,200 positive cash flow

d. $73,200 positive cash flow

e. None of the above

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