Prepare Cash Disbursement for purchases Shrek & Fiona CompanyStatement of Financial PositionAs of December 31, 2020Current AssetsCurrent LiabilitiesAccounts Payable (N2)Taxes PayableCash18,000240,000Accounts Receivable (N1)1,192,00013,200Less: Uncollectible accounts(22,400) 1,169,600Dividends Payable500,000InventoriesTotal Current Liabilities753,200Raw Materials (12,000 pounds)30,000Finished Goods (4,000 units)140,000170,000Total Current Assets1,357,600Stockholder's EquityCommon Stock (100,000 shares)500,000Non-current AssetsRetained Earnings360,400Property, plant, and equipment320,000Total Stockholder's Equity860,400Less: Accumulated depreciation(64,000)256,000Total Assets1,613,600Total Liabilities and SHE1,613,600N1 2020 3rd quarter sales P2,500,000P200,0002020 4th quarter sales P3,100,000992,000P 1,192,000N2 2020 3rd quarter purchases P300,000P75,0002020 4th quarter purchases P330,000165,000240,000Raw Materials Purchases BudgetFor 2021Quarter 1Quarter 2Quarter 3Quarter 4YearUnits Required for ProductionDirect Material per Unit (Ibs.)40,00044,00048,40053,240185,640333Total Materials Needed120,000132,000145,200159,720,920Add: Desired Ending Inventory13,20014,52015,97215,00015,000Total Units Required133,200146,520161,172174,720571,92015,972158,748Less: Beginning Inventory12,00013,20014,52012,000Units to be Purchased121,200133,320146,652559,920Unit Price2.502.502.502.502.50Total Purchases303,000.00333,300.00366,630.00396,870.001,399,800.00Undiscounted Current Quarter151,500.00166,650.00183,315.00198,435.00Discount1st Quarter Purchases143,925.0075,750.0075,750.00295,425.007,575.002nd Quarter Purchases158,317.5083,325.0083,325.00324,967.508,332.503rd Quarter Purchases174,149.2591,657.50265,806.759,165.754th Quarter PurchasesTotal188,513.25188,513.259,921.75143,925.00234,067.50333,224.25363,495.751,074,712.50 1. Finished product requires 3 pounds of direct materials at P2.50 per pound. Finished good ending inventory isequal to 10% of the next quarter sales while raw materials ending inventory is equal to 10% of the next quarterproduction needs of materials. First quarter of 2022 sales is expected to be at 50,000 units while raw materialsending is at 13,500 pounds. (Units are rounded to the nearest ones.)2. Each quarter's purchase are paid 50% in that quarter with 5% purchase discount, 25% in the following quarterand the remainder in the second quarter following the purchase.3. Each finished goods requires 5 direct labor hours with an hourly rate of P4.00 payable on the end of eachmonth.4. For Factory overhead budget, use the following cost formula:Indirect laborPO.02 per direct labor worked (same payment scheme with direct labor)P2 per unit producedP48,000 annually, paid at the beginning of the yearIndirect materialInsuranceP6,500 per monthP500 per quarter plus PO.50 per unit producedFactory rentUtilitiesMaintenanceP300 per quarter plus PO.30 per unit produced10% of the PPE cost, annuallyDepreciationAll overhead costs involve cash outlays are paid in the period which they are incurred, insurance cost. Worthy tonote, the company assumes that all indirect materials are used and paid in the month it was purchased.5. Selling and administrative expensesAdvertisingP65,000 annually, paid at the beginning of the yearCommission5% of total sales, paid quarterlyAdmin salariesP100,000 per quarter (same payment scheme with direct labor)Office rentP5,000 per month6. Income tax is 30%, paid on the first quarter of the following year.7. For cash budget, assume the following:a. The company desires to maintain P15,000 minimum cash balanceb. Dividend is declared every end of the 4th quarter of the year P15 per issued and outstanding share and paidevery 2nd quarter of the following yearc. At the end of the 2nd quarter, the company plans to purchase P100,000 worth of equipment.d. Any excess cash at the end of the 1st quarter of the year is used to buy long term investments P10,000increments. 3% interest rate is credited to the company's bank account at the quarter's end based onoriginal cost of investmente. In case of deficit, the company borrow from the bank P10,000 increments, payable in one year, 10% interestrate is automatically debited to the companys bank account at the end of every quarter.

Cash disbursement can be defined as the outflow of cash from the business. It arises due to…

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Business

Accounting

Prepare Cash Disbursement for purchases

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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