Create a cash budget using the pic PART ADS Pharmacy sells a product that has a highly seasonal variation with peak sales occurring inthe third quarter. The following information was given for expected sales data for the comingyear 2020. The product of the pharmacy sells for $6.00 per unit. Budgeted sales for the nextfour quarters are as follows: -QuartersBudgetedSales in Unitsi.ii.iii.iv.V.1Sales are collected in the following pattern: 60% in the quarter the sales are made and theremaining 40% in the following quarter.vi.2On January 1, 2020, the records showed 60 000 in accounts receivables as well as the followinginformation.vii.2020350 000 70 000 120 000460 000Cash balance at January first was $38 000.00. Also, in the first quarter directmaterial cost $70 000.00, direct Labour cost $80 000.00, Administration expenses$100 000.00, Taxes $10 000.00 and Advertising $15 000.00.Equipment was purchased in the first quarter for $50 000.00. Equipmentpurchases increased in the second quarter by 30%. No other equipment waspurchased.A dividend of $16 000.00 is to be paid in the first quarter and fourth quarter only.Administration Expenses rose by 25% in the second quarter, 20% in the third,quarter and 10% in the fourth quarter. The increased in expenses was based on theprevious quarter figures.For financing purposes, a loan of $85 000.00 was received in the first quarter and$40 000.00 in the second quarter.In the third quarter the $85 000.00 loan with interest of $3 000.00 were repaid andin the fourth quarter the $40 000.00 loan with interest of $6 000.00 were repaid.Direct materials and Direct labour increased each quarter by $15 000 and10 000 respectively. viiiRent was charged at $ 20 000.00 quarterly.

A cash budget is a financial tool that helps individuals and businesses plan and manage their cash…

four quarters are as follows:- Quarters Budgeted Sales in Units i. ii. iii. iv. V. 1 vi. 2 Sales are collected in the following pattern: 60% in the quarter the sales are made and the remaining 40% in the following quarter. vii. 50 000 70 000 On January 1, 2020, the records showed 60 000 in accounts receivables as well as the followi information. 2020 3 120 000 4 60 000 Cash balance at January first was $38 000.00. Also, in the first quarter direct material cost $70 000.00, direct Labour cost $80 000.00, Administration exper $100 000.00, Taxes $10 000.00 and Advertising $15 000.00. Equipment was purchased in the first quarter for $50 000.00. Equipment purchases increased in the second quarter by 30%. No other equipment was purchased. A dividend of $16 000.00 is to be paid in the first quarter and fourth quarter om Administration Expenses rose by 25% in the second quarter, 20% in the third, quarter and 10% in the fourth quarter. The increased in expenses was based on previous quarter figures. For financing purposes, a loan of $85 000.00 was received in the first quarter a $40 000.00 in the second quarter. In the third quarter the $85 000.00 loan with interest of $3 000.00 were repaid in the fourth quarter the $40 000.00 loan with interest of $6 000.00 were repai Direct materials and Direct labour increased each quarter by $15 000 and 10 000 respectively.

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 15E: Palmgren Company produces consumer products. The sales budget for four months of the year is...