Pasol Company has just prepared its master budget for the year 2016. Some of the information used in the preparation of such budget is as follows: Budgeted Sales January P480,000 February 520,000 March 560,000 April 500,000 May 576,000 June 640,000 1. Twenty percent of total sales is cash sales. The collections pattern for the sales on credit is as follows  30% in the month of sale  40% in the month after the month of sale  25% in the second month after the month of sale 2. Pasol Company’s gross margin rate is 60% of sales 3. Accounts payable arising from merchandise purchases is paid for in the month following the purchase 4. The company desires an inventory at the end of each month equal to 30% of the next month’s sales in units 5. The variable operating expenses (other than cost of goods sold) are 10% of sales and are paid for in the month following the sale 6. The annual fixed operating expenses are as follows: Depreciation P336,000 Advertising 576,000 Insurance 144,000 Salaries 864,000 Property taxes 192,000 7. All of the fixed operating expenses are incurred uniformly throughout the year. Cash fixed operating expenses are paid in the month of incurrence, except for:  Insurance – paid quarterly in January, April, and July  Property taxes – paid twice a year in April and October Questions: a. The budgeted cash disbursements to be made in April for merchandise purchases is a. P189,120 b. P524,800 c. P216,800 d. P272,800 b. Assume that the expected cash balance at the beginning of April is P51,600. How much is the budgeted cash balance as of April 30? a. (P21,600) b. P30,000 c. P554,800 d. P57,680

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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Question

Pasol Company has just prepared its master budget for the year 2016. Some of the information used in the preparation of such budget is as follows:
Budgeted Sales January P480,000
February 520,000
March 560,000
April 500,000
May 576,000
June 640,000

1. Twenty percent of total sales is cash sales. The collections pattern for the sales on credit is as follows
 30% in the month of sale
 40% in the month after the month of sale
 25% in the second month after the month of sale

2. Pasol Company’s gross margin rate is 60% of sales

3. Accounts payable arising from merchandise purchases is paid for in the month following the purchase

4. The company desires an inventory at the end of each month equal to 30% of the next month’s sales in units

5. The variable operating expenses (other than cost of goods sold) are 10% of sales and are paid for in the month following the sale

6. The annual fixed operating expenses are as follows:
Depreciation P336,000
Advertising 576,000
Insurance 144,000
Salaries 864,000
Property taxes 192,000

7. All of the fixed operating expenses are incurred uniformly throughout the year. Cash fixed operating expenses are paid in the month of incurrence, except for:

 Insurance – paid quarterly in January, April, and July
 Property taxes – paid twice a year in April and October

Questions:

a. The budgeted cash disbursements to be made in April for merchandise purchases is
a. P189,120
b. P524,800
c. P216,800
d. P272,800

b. Assume that the expected cash balance at the beginning of April is P51,600. How much is the budgeted cash balance as of April 30?
a. (P21,600)
b. P30,000
c. P554,800
d. P57,680

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