Garden Sales, Incorporated, sells garden supplies. Management is planning its cash needs for the second quarter. The company usually has to borrow money during this quarter to support peak sales of lawn care equipment, which occur during May. The following information has been assembled to assist in preparing a cash budget for the quarter: a. Budgeted monthly absorption costing income statements for April-July are: Sales Cost of goods sold Gross margin Selling and administrative expenses: Selling expense Administrative expense Total selling and administrative expenses Net operating income "Includes $16,000 of depreciation each month. April $ 540,000 378,000 162,000 74,000 116,000 $ 46,000 May $ 740,000 $18,000 222,000 94,000 56,000 150,000 $ 72,000 June $ 440,000 308,000 132,000 55,000 34,400 89,400 $ 42,600 July $ 340,000 238,000 102,000 34,000 32,000 66,000 $ 36,000 b. Sales are 20% for cash and 80% on account c. Sales on account are collected over a three-month period with 10% collected in the month of sale: 80% collected in the first month following the month of sale; and the remaining 10% collected in the second month following the month of sale. February's sales totaled $160,000, and March's sales totaled $220,000. d. Inventory purchases are paid for within 15 days. Therefore, 50% of a month's inventory purchases are paid for in the month of purchase. The remaining 50% is paid in the following month. Accounts payable at March 31 for inventory purchases during March total $99,400. e. Each month's ending inventory must equal 20% of the cost of the merchandise to be sold in the following month. The merchandise Inventory at March 31 is $75,600. f. Dividends of $24,000 will be declared and paid in April. g. Land costing $32.000 will be purchased for cash in May. h. The cash balance at March 31 is $46,000; the company must maintain a cash balance of at least $40,000 at the end of each month. 1. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $200,000. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Required:
1. Prepare a schedule of expected cash collections for April May, and June, and for the quarter in total
2. Prepare the following for merchandise inventory
A merchandise purchases budget for April, May, and June
D. A schedule of expected cash disbursements for merchandise purchases for April, May and June, and for the quaner in total
3. Prepare a cash budget for April, May, and June as well as in total for the quarter
Complete this question by entering your answers in the tabs below.
Required 1 Required 2A Required 28 Required 3
Prepare a schedule of expected cash collections for April, May and June, and for the quarter in total.
Schedule of Expected Cash Collections
Apri
Cash sa
Saeson acut
March
May
Complete this question by entering your answers in the tabs below.
Required inventory purchases
June
Required 1 Required 24 Required 28 Required 3
Prepare the following for merchandise inventory, a merchandise purchases budget for April, May, and June.
Merchandise Purchases Budget
April
Required 2A >
< Required 1
June
Required 28 >
Required:
Prepare a schedule of expected cash collections for April, May, and June, and for the quarter in total.
2. Prepare the following for merchandise inventory:
April purchases
May purchases
June purchases
Total cash disbursements
a. A merchandise purchases budget for April, May, and June
b. A schedule of expected cash disbursements for merchandise purchases for April, May, and June, and for the quarter in total
3. Prepare a cash budget for April, May, and June as well as in total for the quarter
Complete this question by entering your answers in the tabs below.
Required 1
Required 24 Required 25 Required 3
Prepare the following for merchandise inventory a schedule of expected cash disbursements for merchandise purchases for
April, May, and June, and for the quarter in total.
Schedule of Expected Cash Disbursements for Merchandise Purchases
April
May
June
Quarter
Transcribed Image Text:Required: 1. Prepare a schedule of expected cash collections for April May, and June, and for the quarter in total 2. Prepare the following for merchandise inventory A merchandise purchases budget for April, May, and June D. A schedule of expected cash disbursements for merchandise purchases for April, May and June, and for the quaner in total 3. Prepare a cash budget for April, May, and June as well as in total for the quarter Complete this question by entering your answers in the tabs below. Required 1 Required 2A Required 28 Required 3 Prepare a schedule of expected cash collections for April, May and June, and for the quarter in total. Schedule of Expected Cash Collections Apri Cash sa Saeson acut March May Complete this question by entering your answers in the tabs below. Required inventory purchases June Required 1 Required 24 Required 28 Required 3 Prepare the following for merchandise inventory, a merchandise purchases budget for April, May, and June. Merchandise Purchases Budget April Required 2A > < Required 1 June Required 28 > Required: Prepare a schedule of expected cash collections for April, May, and June, and for the quarter in total. 2. Prepare the following for merchandise inventory: April purchases May purchases June purchases Total cash disbursements a. A merchandise purchases budget for April, May, and June b. A schedule of expected cash disbursements for merchandise purchases for April, May, and June, and for the quarter in total 3. Prepare a cash budget for April, May, and June as well as in total for the quarter Complete this question by entering your answers in the tabs below. Required 1 Required 24 Required 25 Required 3 Prepare the following for merchandise inventory a schedule of expected cash disbursements for merchandise purchases for April, May, and June, and for the quarter in total. Schedule of Expected Cash Disbursements for Merchandise Purchases April May June Quarter
Garden Sales, Incorporated, sells garden supplies. Management is planning its cash needs for the second quarter. The company
usually has to borrow money during this quarter to support peak sales of lawn care equipment, which occur during May. The following
information has been assembled to assist in preparing a cash budget for the quarter:
a. Budgeted monthly absorption costing income statements for April-July are:
Sales
Cost of goods sold
Gross margin
Selling and administrative expenses:
Selling expense
Administrative expense
Total selling and administrative expenses
Net operating income
"Includes $16,000 of depreciation each month.
$ 540,000
378,000
162,000
74,000
116,000
$ 46,000
May
$ 740,000
$18,000
222,000
94,000
56,000
150,000
$ 72,000
June
$ 440,000
308,000
132,000
55,000
34,400
89,400
$ 42,600
July
$ 340,000
238,000
102,000
34,000
32,000
66,000
$ 36,000
b. Sales are 20% for cash and 80% on account.
c. Sales on account are collected over a three-month period with 10% collected in the month of sale: 80% collected in the first month
following the month of sale; and the remaining 10% collected in the second month following the month of sale. February's sales
totaled $160,000, and March's sales totaled $220,000.
d. Inventory purchases are paid for within 15 days. Therefore, 50% of a month's inventory purchases are paid for in the month of
purchase. The remaining 50% is paid in the following month. Accounts payable at March 31 for inventory purchases during March
total $99,400.
e. Each month's ending inventory must equal 20% of the cost of the merchandise to be sold in the following month. The merchandise
inventory at March 31 is $75.600.
f. Dividends of $24,000 will be declared and paid in April.
g. Land costing $32,000 will be purchased for cash in May.
h. The cash balance at March 31 is $46,000; the company must maintain a cash balance of at least $40,000 at the end of each month.
L. The company has an agreement with a local bank that allows the company to borrow in increments of $1.000 at the beginning of
each month, up to a total loan balance of $200,000. The interest rate on these loans is 1% per month and for simplicity we will
assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the
end of the quarter.
Transcribed Image Text:Garden Sales, Incorporated, sells garden supplies. Management is planning its cash needs for the second quarter. The company usually has to borrow money during this quarter to support peak sales of lawn care equipment, which occur during May. The following information has been assembled to assist in preparing a cash budget for the quarter: a. Budgeted monthly absorption costing income statements for April-July are: Sales Cost of goods sold Gross margin Selling and administrative expenses: Selling expense Administrative expense Total selling and administrative expenses Net operating income "Includes $16,000 of depreciation each month. $ 540,000 378,000 162,000 74,000 116,000 $ 46,000 May $ 740,000 $18,000 222,000 94,000 56,000 150,000 $ 72,000 June $ 440,000 308,000 132,000 55,000 34,400 89,400 $ 42,600 July $ 340,000 238,000 102,000 34,000 32,000 66,000 $ 36,000 b. Sales are 20% for cash and 80% on account. c. Sales on account are collected over a three-month period with 10% collected in the month of sale: 80% collected in the first month following the month of sale; and the remaining 10% collected in the second month following the month of sale. February's sales totaled $160,000, and March's sales totaled $220,000. d. Inventory purchases are paid for within 15 days. Therefore, 50% of a month's inventory purchases are paid for in the month of purchase. The remaining 50% is paid in the following month. Accounts payable at March 31 for inventory purchases during March total $99,400. e. Each month's ending inventory must equal 20% of the cost of the merchandise to be sold in the following month. The merchandise inventory at March 31 is $75.600. f. Dividends of $24,000 will be declared and paid in April. g. Land costing $32,000 will be purchased for cash in May. h. The cash balance at March 31 is $46,000; the company must maintain a cash balance of at least $40,000 at the end of each month. L. The company has an agreement with a local bank that allows the company to borrow in increments of $1.000 at the beginning of each month, up to a total loan balance of $200,000. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter.
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