Learning Objective 5SalesManufacturing costsSelling and administrative expensesCapital expendituresThe company expects to sell about 10 % of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month following the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent $9,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in January, and theannual property taxes are paid in December. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month.Current assets as of September 1 include cash of $48,000, marketable securities of $68,000, and accounts receivable of $139,000 ($30,000 from July sales and $109,000 from August sales). Sales on account for July and August were $100,000 and $109,000, respectively. Current liabilities as of September 1 include $9,000 of accounts payable incurred in August for manufacturing costs. All selling andadministrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of $18,000 will be made in October. Bridgeport's regular quarterly dividend of $9,000 is expected to be declared in October and paid in November. Management desires to maintain a minimum cash balance of $47,000.Required:1. Prepare a monthly cash budget and supporting schedules for September, October, and November. Assume 360 days per year for interest calculations.Bridgeport Housewares Inc.Cash BudgetFor the Three Months Ending November 30SeptemberLine Item DescriptionEstimated cash receipts from:Cash salesCollection of accounts receivableTotal cash receiptsLess estimated cash payments for:Manufacturing costsSelling and administrative expensesCapital expendituresOther purposes:Income taxDividends✓Feedback✓✓Total cash paymentsCash increase or (decrease)Plus cash balance at beginning of monthCash balance at end of monthLess minimum cash balanceExcess or (deficiency)September October November$125,000 $148,000 $209,00053,000 64,000 75,00044,000 44,00079,00050,000✓✓✓✓$$12,500 ✓79,300 X44,000✓$October14,800 ✓126,900 X44,000 ✓18,000November20,900 ✓79,000 ✓9,000✓ Check My WorkThe primary source of estimated cash receipts is from cash sales and collections on account.eBc

Budgeting is the process of estimating future operations based on past performance. % are estimated…

Answered: Ò¶Ò Ò¶¶ äள O

Business

Accounting

Ò¶Ò Ò¶¶ äள O

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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W h a t i s t h e c o s t o f c a p i t a l ? W h a t a r e t h e n e t p r o c e e d s f r o m t h e s a l e o f a b o n d ? W h a t a r e f l o t a t i o n c o s t s , a n d h o w d o t h e y a f f e c t a b o n d ’ s n e t p r o c e e d s ? W h a t p r e m i s e a b o u t s h a r e v a l u e u n d e r l i e s t h e c o n s t a n t - g r o w t h v al u a t i o n ( G o r d o n g r o w t h ) m o d e l t h a t i s u s e d t o m e a s u r e t h e c o s t o f c o m m o n s t o c k e q u i t y , r s ?
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W h a t b a s i c p r o c e d u r e i s u s e d t o v a l u e a b o n d t h a t p a y s a n n u a l i n t e r e s t ? S e m i a n n u a l i n t e r e s t ? W h a t r el a t i o n s h i p b e t w e e n t h e r e q u i r e d r e t u r n a n d t h e c o u p o n i n t e r e s t r a t e w i l l c a u s e a b o n d t o s e l l a t a d i s c o u n t ? A t a p r e m i u m ? A t i t s p a r v a l u e ? I f t h e r e q u i r e d r e t u r n o n a b o n d d i f f e r s f r o m i t s c o u p o n i n t e r e s t r a t e , d e s c r i b e t h e b e h a v i o r o f t h e b o n d v a l u e o v e r t i m e a s t h e b o n d m o v e s t o w a r d ma t u r i t y . A s a r i s k - a v e r s e i n v e s t o r , w o u l d y o u p r e f e r b o n d s w i t h s h o r t o r l o n g p e r i o d s u n t i l m a t u r i t y ? W h y ?