Frontier Ltd., a leader in solar technology, makes all sales on credit, offering terms 2/10 net 40. Expected sales for each month January to June (in $M) are respectively; Jan Feb Mar April May June 145 Sales (SM) 70 95 120 130 110. The accounting staff has prepared a schedule detailing the expected cash collections over the 6 month period January to June. From experience, Frontier expects to collect 20% of any month's sales in that same month, 70% in the following month, and the remaining 10% in the second month following the month of sale. Its expenses, estimated as a percentage of the month's projected sales are; for raw material (50%) paid in the following month since it gets 30 days' credit from its suppliers, wages and salaries (15%) and lease payments (5%) both paid in the month of sale. Taxes are paid at the end of each quarter and are expected to be $22M. (i) Set out ABC's cash budget for the April – June quarter? (ii) Identify whether Frontier has a cash surplus or deficit for each month
Frontier Ltd., a leader in solar technology, makes all sales on credit, offering terms 2/10 net 40. Expected sales for each month January to June (in $M) are respectively; Jan Feb Mar April May June 145 Sales (SM) 70 95 120 130 110. The accounting staff has prepared a schedule detailing the expected cash collections over the 6 month period January to June. From experience, Frontier expects to collect 20% of any month's sales in that same month, 70% in the following month, and the remaining 10% in the second month following the month of sale. Its expenses, estimated as a percentage of the month's projected sales are; for raw material (50%) paid in the following month since it gets 30 days' credit from its suppliers, wages and salaries (15%) and lease payments (5%) both paid in the month of sale. Taxes are paid at the end of each quarter and are expected to be $22M. (i) Set out ABC's cash budget for the April – June quarter? (ii) Identify whether Frontier has a cash surplus or deficit for each month
Excel Applications for Accounting Principles
4th Edition
ISBN:9781111581565
Author:Gaylord N. Smith
Publisher:Gaylord N. Smith
Chapter21: Cash Budgeting (cashbud)
Section: Chapter Questions
Problem 1R: On January 1, Sweet Pleasures, Inc., begins business. The company has 14,000 cash on hand and is...
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![Frontier Ltd., a leader in solar technology, makes all sales on credit, offering terms 2/10 net 40.
Expected sales for each month January to June (in $M) are respectively;
Jan Feb Mar April May June
145
Sales (SM) 70 95
120
130 110.
The accounting staff has prepared a schedule detailing the expected cash collections over the 6
month period January to June. From experience, Frontier expects to collect 20% of any month's
sales in that same month, 70% in the following month, and the remaining 10% in the second
month following the month of sale. Its expenses, estimated as a percentage of the month's
projected sales are; for raw material (50%) paid in the following month since it gets 30 days'
credit from its suppliers, wages and salaries (15%) and lease payments (5%) both paid in the
month of sale. Taxes are paid at the end of each quarter and are expected to be $22M.
(i) Set out ABC's cash budget for the April – June quarter?
(ii) Identify whether Frontier has a cash surplus or deficit for each month](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F94394745-9437-4c8b-8a35-c22c52518190%2F4fccdc30-7ba0-47bb-a5fd-3ab4a3cc6e62%2Fhof4ibb_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Frontier Ltd., a leader in solar technology, makes all sales on credit, offering terms 2/10 net 40.
Expected sales for each month January to June (in $M) are respectively;
Jan Feb Mar April May June
145
Sales (SM) 70 95
120
130 110.
The accounting staff has prepared a schedule detailing the expected cash collections over the 6
month period January to June. From experience, Frontier expects to collect 20% of any month's
sales in that same month, 70% in the following month, and the remaining 10% in the second
month following the month of sale. Its expenses, estimated as a percentage of the month's
projected sales are; for raw material (50%) paid in the following month since it gets 30 days'
credit from its suppliers, wages and salaries (15%) and lease payments (5%) both paid in the
month of sale. Taxes are paid at the end of each quarter and are expected to be $22M.
(i) Set out ABC's cash budget for the April – June quarter?
(ii) Identify whether Frontier has a cash surplus or deficit for each month
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