Oneida Company's operations began in August. August sales were $150,000 and purchases were $120,000. The beginning cash balance for september is $34,500. Oneida's owner approaches the bank for a $100,000 loan to be made on September 2 and repaid on November 30. The bank's loan officer asks the owner to prepare monthly cash budgets. Its budgeted sales, merchandise purchases, and cash payments for other expenses for the next three months follow. Budgeted. Sales Merchandise purchases. Cash payments Salaries Rent Insurance Repayment of loan. Interest on loan September $ 260,000 225,000 30,000 8,000 5,400 1,000 October $425,000 210,000 30,000 8,000 5,400 1,000 November $ 450,000 201,000 30,000 8,000 5,400 100,000 1,000 All sales are on credit where 76% of credit sales are collected in the month following the sale, and the remaining 24% collected in the second month following the sale. All merchandise is purchased on credit; 86% of the balance is paid in the month following a purchase, and the remaining 14% is paid in the second month. Required: Prepare the following for the months of September, October, and November. 1. Schedule of cash receipts from sales. 2. Schedule of cash payments for direct materials. 3. Cash budget.
Oneida Company's operations began in August. August sales were $150,000 and purchases were $120,000. The beginning cash balance for september is $34,500. Oneida's owner approaches the bank for a $100,000 loan to be made on September 2 and repaid on November 30. The bank's loan officer asks the owner to prepare monthly cash budgets. Its budgeted sales, merchandise purchases, and cash payments for other expenses for the next three months follow. Budgeted. Sales Merchandise purchases. Cash payments Salaries Rent Insurance Repayment of loan. Interest on loan September $ 260,000 225,000 30,000 8,000 5,400 1,000 October $425,000 210,000 30,000 8,000 5,400 1,000 November $ 450,000 201,000 30,000 8,000 5,400 100,000 1,000 All sales are on credit where 76% of credit sales are collected in the month following the sale, and the remaining 24% collected in the second month following the sale. All merchandise is purchased on credit; 86% of the balance is paid in the month following a purchase, and the remaining 14% is paid in the second month. Required: Prepare the following for the months of September, October, and November. 1. Schedule of cash receipts from sales. 2. Schedule of cash payments for direct materials. 3. Cash budget.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
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Transcribed Image Text:Required 1 Required 2 Required 3
Prepare the schedule of cash receipts from sales.
Sales
Cash receipts from:
Prior period sales
Two periods prior sales
Total cash receipts
Required 1 Required 2
Materials purchases
Cash payments for
Prior period purchases
Two periods prior purchases
Total cash payments
Required 1 Required 2
Beginning balance
Prepare the schedule of cash payments for direct materials.
Prepare the cash budget.
ONEIDA COMPANY
Schedule of Cash Receipts from Sales
September
Total cash available
Less: Cash payments for
Total cash payments
Preliminary cash balance
Loan activity
Additional loan
Repayment of loan
Ending cash balance
Required 3
ONEIDA COMPANY
Schedule of Cash Payments for Direct Materials
Required 3
$
$
< Required 1
$
$
$
< Required 1
ONEIDA COMPANY
Cash Budget
260,000 $
September
34,500
November
September
225,000 $ 210,000 $ 201,000
0
$
0 $
October
Required 2
October
October
425,000
100,900
0
November
0 $
0 $
34,500 $ 100,900 $ 79,800
Required 2 >
Required 3 >
November
450,000
79,800
0
0
0
Transcribed Image Text:Oneida Company's operations began in August. August sales were $150,000 and purchases were $120,000. The beginning cash
balance for september is $34,500. Oneida's owner approaches the bank for a $100,000 loan to be made on September 2 and repaid
on November 30. The bank's loan officer asks the owner to prepare monthly cash budgets. Its budgeted sales, merchandise
purchases, and cash payments for other expenses for the next three months follow.
Budgeted
Sales
Merchandise purchases
Cash payments
Salaries
Rent
Insurance
Repayment of loan
Interest on loan
September
$ 260,000
225,000
30,000
8,000
5,400
1,000
October
$ 425,000
210,000
30,000
8,000
5,400
1,000
November
$ 450,000
201,000
30,000
8,000
5,400
100,000
1,000
All sales are on credit where 76% of credit sales are collected in the month following the sale, and the remaining 24% collected in the
second month following the sale. All merchandise is purchased on credit; 86% of the balance is paid in the month following a
purchase, and the remaining 14% is paid in the second month.
Required:
Prepare the following for the months of September, October, and November.
1. Schedule of cash receipts from sales.
2. Schedule of cash payments for direct materials.
3. Cash budget.
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