Hugo Medical Supply has applied for a loan. Pacific Commerce Bank has requested a budgeted balance sheet as of April 30, and a combined cash budget for April. As Hugo Medical Supply's controller, you have assembled the following information: a. March 31 equipment balance, $52,600; accumulated depreciation, $41,300. b. April capital expenditures of $ 42,400 budgeted for cash purchase of equipment. c. April depreciation expense, $700. d. Cost of goods sold, 60%of sales. e. Other April operating expenses, including income tax, total $14,200, 35% of which will be paid in cash and the remainder accrued at April 30. f. March 31 owners' equity, $92,600. g. March 31 cash balance, $40,300. h. April budgeted sales, $90,000, 70% of which is for cash. Of the remaining 30%, half will be collected in April and half in May. i. April cash collections on March sales, $29,100. j. April cash payments of March 31 liabilities incurred for March purchases of inventory, $17,300. k. March 31 inventory balance,$29,200. l. April purchases of inventory, $10,700 for cash and $36,300 on credit. Half of the credit purchases will be paid in April and half in May. Requirements: 1. Prepare the budgeted balance sheet for HugoMedical Supply at April 30. Show separate computations for cash, inventory, and owners' equity balances. 2. Prepare the combined cash budget for April. 3. Suppose HugoMedical Supply has become aware of more efficient (and more expensive) equipment than it budgeted for purchase in April. What is the total amount of cash available for equipment purchases in April, before financing, if the minimum desired ending cash balance is $14,000? (For this requirement, disregard the $42,400 initially budgeted for equipment purchases.) 4. Before granting a loan to Hugo Medical Supply, Pacific Commerce Bank asks for a sensitivity analysis assuming that April sales are only $60,000 rather than the $90,000 originally budgeted. (While the cost of goods sold will change, assume that purchases, depreciation, and the other operating expenses will remain the same as in the earlier requirements.) a. Prepare a revised budgeted balance sheet for Hugo Medical Supply, showing separate computations for cash, inventory, and owners' equity balances. b. Suppose Hugo Medical Supply has a minimum desired cash balance of $25,000. Will the company need to borrow cash in April?

Hugo Medical Supply has applied for a loan. Pacific Commerce Bank has requested a budgeted balance sheet as of April 30, and a combined cash budget for April. As Hugo Medical Supply's controller, you have assembled the following information: a. March 31 equipment balance, $52,600; accumulated depreciation, $41,300. b. April capital expenditures of $ 42,400 budgeted for cash purchase of equipment. c. April depreciation expense, $700. d. Cost of goods sold, 60%of sales. e. Other April operating expenses, including income tax, total $14,200, 35% of which will be paid in cash and the remainder accrued at April 30. f. March 31 owners' equity, $92,600. g. March 31 cash balance, $40,300. h. April budgeted sales, $90,000, 70% of which is for cash. Of the remaining 30%, half will be collected in April and half in May. i. April cash collections on March sales, $29,100. j. April cash payments of March 31 liabilities incurred for March purchases of inventory, $17,300. k. March 31 inventory balance,$29,200. l. April purchases of inventory, $10,700 for cash and $36,300 on credit. Half of the credit purchases will be paid in April and half in May. Requirements: 1. Prepare the budgeted balance sheet for HugoMedical Supply at April 30. Show separate computations for cash, inventory, and owners' equity balances. 2. Prepare the combined cash budget for April. 3. Suppose HugoMedical Supply has become aware of more efficient (and more expensive) equipment than it budgeted for purchase in April. What is the total amount of cash available for equipment purchases in April, before financing, if the minimum desired ending cash balance is $14,000? (For this requirement, disregard the $42,400 initially budgeted for equipment purchases.) 4. Before granting a loan to Hugo Medical Supply, Pacific Commerce Bank asks for a sensitivity analysis assuming that April sales are only $60,000 rather than the $90,000 originally budgeted. (While the cost of goods sold will change, assume that purchases, depreciation, and the other operating expenses will remain the same as in the earlier requirements.) a. Prepare a revised budgeted balance sheet for Hugo Medical Supply, showing separate computations for cash, inventory, and owners' equity balances. b. Suppose Hugo Medical Supply has a minimum desired cash balance of $25,000. Will the company need to borrow cash in April?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Concept explainers

Question

a.	March 31 equipment balance, $52,600; accumulated depreciation, $41,300.
b.	April capital expenditures of $ 42,400 budgeted for cash purchase of equipment.
c.	April depreciation expense, $700.
d.	Cost of goods sold, 60%of sales.
e.	Other April operating expenses, including income tax, total $14,200, 35% of which will be paid in cash and the remainder accrued at April 30.
f.	March 31 owners' equity, $92,600.
g.	March 31 cash balance, $40,300.
h.	April budgeted sales, $90,000, 70% of which is for cash. Of the remaining 30%, half will be collected in April and half in May.
i.	April cash collections on March sales, $29,100.
j.	April cash payments of March 31 liabilities incurred for March purchases of inventory, $17,300.
k.	March 31 inventory balance,$29,200.
l.	April purchases of inventory, $10,700 for cash and $36,300 on credit. Half of the credit purchases will be paid in April and half in May.

Requirements:

Prepare the budgeted balance sheet for HugoMedical Supply at April 30. Show separate computations for cash, inventory, and owners' equity balances.

Prepare the combined cash budget for April.

Suppose HugoMedical Supply has become aware of more efficient (and more expensive) equipment than it budgeted for purchase in April. What is the total amount of cash available for equipment purchases in April, before financing, if the minimum desired ending cash balance is $14,000? (For this requirement, disregard the

$42,400 initially budgeted for equipment purchases.)

Before granting a loan to Hugo Medical Supply, Pacific Commerce Bank asks for a sensitivity analysis assuming that April sales are only $60,000 rather than the $90,000 originally budgeted. (While the cost of goods sold will change, assume that purchases, depreciation, and the other operating expenses will remain the same as in the earlier requirements.)

a.	Prepare a revised budgeted balance sheet for Hugo Medical Supply, showing separate computations for cash, inventory, and owners' equity balances.
b.	Suppose Hugo Medical Supply has a minimum desired cash balance of $25,000. Will the company need to borrow cash in April?

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 5 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.