Please explain how we got the "December Cash Disbursements" as "$264300" Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow: o Sales are budgeted at $290,000 for November, $310,000 for December, and $210,000 for January. o Collections are expected to be 65% in the month of sale and 35% in the month following the sale. o The cost of goods sold is 80% of sales. o The company desires to have an ending merchandise inventory at the end of each month equal to 70% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase. o Other monthly expenses to be paid in cash are $21,100. o Monthly depreciation is $21,000. o Ignore taxes. Balance Sheet October 31 Assets Cash............................................................................................................. $ 25,000 Accounts receivable...................................................................................... 77,000 Merchandise inventory................................................................................... 162,400 Property, plant and equipment, net of $624,000 accumulated depreciation....... 1,026,000 Total assets.................................................................................................. $1,290,400 Liabilities and Stockholders' Equity Accounts payable.......................................................................................... $ 239,000 Common stock.............................................................................................. 740,000 Retained earnings.......................................................................................... 311,400 Total liabilities and stockholders' equity.......................................................... $1,290,400 [QUESTION] The cash balance at the end of December would be: A) $69,100 B) $25,000 C) $57,900 D) $38,300 Cash Budget Cash balance, October 31.......................................................... $25,000 Add: accounts receivable collection........................................... 77,000 Add: November credit sales collection ($290,000 × 65%)............. 188,500 Cash available........................................................................... 290,500 Less: accounts payable disbursement........................................ 239,000 Less: November expenses disbursement.................................... 21,100 Cash balance, December 1........................................................ 30,400 Add: Cash collection in December............................................. 303,000 Cash available........................................................................... 333,400 Less: December cash disbursements......................................... 264,300 Cash balance, December 31...................................................... $69,100
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.
Please explain how we got the "December Cash Disbursements" as "$264300"
Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow:
o Sales are budgeted at $290,000 for November, $310,000 for December, and $210,000 for January.
o Collections are expected to be 65% in the month of sale and 35% in the month following the sale.
o The cost of goods sold is 80% of sales.
o The company desires to have an ending merchandise inventory at the end of each month equal to 70% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase.
o Other monthly expenses to be paid in cash are $21,100.
o Monthly
o Ignore taxes.
|
|
Balance Sheet October 31 |
|
|
|
||
|
|
Assets |
|
|
|
Cash............................................................................................................. |
$ 25,000 |
|
|
|
77,000 |
|
|
Merchandise inventory................................................................................... |
162,400 |
|
|
Property, plant and equipment, net of $624,000 |
1,026,000 |
|
|
Total assets.................................................................................................. |
$1,290,400 |
|
|
|
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
Accounts payable.......................................................................................... |
$ 239,000 |
|
|
Common stock.............................................................................................. |
740,000 |
|
|
|
311,400 |
|
|
Total liabilities and stockholders' equity.......................................................... |
$1,290,400 |
[QUESTION]
- The cash balance at the end of December would be:
- A) $69,100
- B) $25,000
- C) $57,900
- D) $38,300
|
|
Cash balance, October 31.......................................................... |
$25,000 |
|
|
Add: accounts receivable collection........................................... |
77,000 |
|
|
Add: November credit sales collection ($290,000 × 65%)............. |
188,500 |
|
|
Cash available........................................................................... |
290,500 |
|
|
Less: accounts payable disbursement........................................ |
239,000 |
|
|
Less: November expenses disbursement.................................... |
21,100 |
|
|
Cash balance, December 1........................................................ |
30,400 |
|
|
Add: Cash collection in December............................................. |
303,000 |
|
|
Cash available........................................................................... |
333,400 |
|
|
Less: December cash disbursements......................................... |
264,300 |
|
|
Cash balance, December 31...................................................... |
$69,100 |
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
