CASH BUDGETRichard LT Corporation is preparing its cash budget for the year 2015. Richard's beginning cash balanceis P20,000. Sales are estimated to be at P500,000, 70% of which are on credit. A total of 80% of creditsales are expected to be collected in 2015. Cash expenditures for the year are forecasted to increase toP350,000, a 25% increase from previous year's balance. Accounts receivable from December 31, 2014totaling10,000 will be collected in the current year. The company is required to make a P50,000 loanpayment and an annual interest payment on December 31, 2015. The loan balance as of December 31,2014 is P100,000 and the annual interest rate is 12%.Prepare a cash budget for the yearended December 31, 2015 * MANUFACTURING COSTMANUFACTURING COSTYoyot Plastic Bins plans to manufacture 5,000 plastic bins during September. Each bin requires P2.50 kilosof plastic and 0.50 hours of direct labor. Plastic costs P1.80/kilo. Direct labor cost is P12.50 per hour andfactory overhead is estimated at P46,875. Yoyot has 400 kilos of plastic in beginning inventory and desiresto have 500 kilos in ending inventory.How many kilos of plastic should Yoyotplan to buy during September? *Your answerHow much should Yoyot budget fordirect labor for September? *Your answerHow much manufacturing overheadwill be charged to each plastic bin inSeptember? *Your answerWhat is the cost per unit of the binsproduced in September? *

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Richard LT Corporation is preparing its cash budget for the year 2015. Richard's beginning cash balance is P20,000. Sales are estimated to be at P500,000, 70% of which are on credit. A total of 80% of credit sales are expected to be collected in 2015. Cash expenditures for the year are forecasted to increase to P350,000, a 25% increase from previous year's balance. Accounts receivable from December 31, 2014 totaling10,000 will be collected in the current year. The company is required to make a P50,000 loan payment and an annual interest payment on December 31, 2015. The loan balance as of December 31, 2014 is P100,000 and the annual interest rate is 12%.

Richard LT Corporation is preparing its cash budget for the year 2015. Richard's beginning cash balance is P20,000. Sales are estimated to be at P500,000, 70% of which are on credit. A total of 80% of credit sales are expected to be collected in 2015. Cash expenditures for the year are forecasted to increase to P350,000, a 25% increase from previous year's balance. Accounts receivable from December 31, 2014 totaling10,000 will be collected in the current year. The company is required to make a P50,000 loan payment and an annual interest payment on December 31, 2015. The loan balance as of December 31, 2014 is P100,000 and the annual interest rate is 12%.

Fundamentals Of Financial Management, Concise Edition (mindtap Course List)

10th Edition

ISBN:9781337902571

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter15: Working Capital Management

Section: Chapter Questions

Problem 10P: CASH BUDGETING Helen Bowers, owner of Helens Fashion Designs, is planning to request a line of...

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Cash budget The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information: The 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 50,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in January, and the annual 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 40,000, marketable securities of 75,000, and accounts receivable of 300,000 (60,000 from July sales and 240,000 from August sales). Sales on account for July and August were 200,000 and 240,000, respectively. Current liabilities as of September 1 include 40,000 of accounts payable incurred in August for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of 55,000 will be made in October. Bridgeports regular quarterly dividend of 25,000 is expected to be declared in October and paid in November. Management desires to maintain a minimum cash balance of 50,000. Instructions Prepare a monthly cash budget and supporting schedules for September, October, and November. On the basis of the cash budget prepared in part (1), what recommendation should be made to the controller?
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Cash budget Pasadena Candle Inc. pays 40% of its purchases on account in the month of the purchase and 60% in the month following the purchase. If purchases are budgeted to be 40,000 for August and 36,000 for September, what are the budgeted cash payments for purchases on account for September?
A companys sales for the coming months are as follows: About 20 percent of sales are cash sales, and the remainder are credit sales. The company finds that typically 10 percent of a months credit sales are paid in the month of sale, 70 percent are paid the next month, and 15 percent are paid in the second month after sale. Expected cash receipts in July are budgeted at what amount? a. 114,520 b. 143,150 c. 145,720 d. 156,000
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CASH BUDGETING Helen Bowers, owner of Helens Fashion Designs, is planning to request a line of credit from her bank. She has estimated the following sales forecasts for the firm for parts of 2016 and 2017. May 2016 180,000 June 180,000 July 360,000 August 540,000 September 720,000 October 360,000 November 360,000 December 90,000 January 2017 180,000 Estimates regarding payments obtained from the credit department are as follows: collected within the month of sale, 10%; collected the month following the sale. 75%; collected the second month following the sale, 15%. Payments for labor and raw materials are made the month after these services were provided. Here are the estimated costs of labor plus raw materials: May 2016 90,000 June 90,000 July 126,000 August 882,000 September 306,000 October 234,000 November 162,000 December 90,000 General and administrative salaries are approximately 27,000 a month. Lease payments under long-term leases are 9,000 a month. Depredation charges are 36,000 a month. Miscellaneous expenses are 2,700 a month. Income tax payments of 63,000 are due in September and December. A progress payment of 180,000 on a new design studio must be paid in October. Cash on hand on July 1 will be 132,000, and a minimum cash balance of 90,000 should be maintained throughout the cash budget period. a. Prepare a monthly cash budget for the last 6 months of 2016. b. Prepare monthly estimates of the required financing or excess fundsthat is, the amount of money Bowers will need to borrow or will have available to invest. c. Now suppose receipts from sales come in uniformly during the month (that is, cash receipts come in at the rate of 1/30 each day), but all outflows must be paid on the 5th. Will this affect the cash budget? That is, will the cash budget you prepared be valid under these assumptions? If not, what could be done to make a valid estimate of the peak financing requirements? No calculations are required, although if you prefer, you can use calculations to illustrate the effects. d. Bowers sales are seasonal; and her company produces on a seasonal basis, just ahead of sales. Without making any calculations, discuss how the companys current and debt ratios would vary during the year if ail financial requirements were met with short-term bank loans. Could changes in these ratios affect the firms ability to obtain bank credit? Explain.
CASH BUDGETING Helen Bowers, owner of Helens Fashion Designs, is planning to request a line of credit from her bank. She has estimated the following sales forecasts for the firm for parts of 2014 and 2015: May 2014 180,000 June 180,000 July 360,000 August 540,000 September 720,000 October 360.000 November 360,000 December 90,000 January 2015 180.000 Estimates regarding payments obtained from the credit department are as follows: collected within the month of sale, 10%; collected the month following the sale, 75%; collected the second month following the sale, 15%. Payments for labor and raw materials are made the month after these services were provided. Here are the estimated costs of labor plus raw materials: May 2014 90,000 June 90,000 July 126,000 August 882.000 September 306,000 October 234,000 November 162,000 December 90,000 General and administrative salaries are approximately 27,000 a month. Lease payments under long-term leases are 9,000 a month. Depreciation charges are 36,000 a month. Miscellaneous expenses arc S2,700 a month. Income tax payments of 63,000 arc due in September and December. A progress payment of 180,000 on a new design studio must be paid in October. Cash on hand on July 1 will be 132,000, and a minimum cash balance of 90,000 should be maintained throughout the cash budget period. a. Prepare a monthly cash budget for the last 6 months of 2014. b. Prepare monthly estimates of the required financing or excess funds that is, the amount of money Bowers will need to borrow or will have available to invest. c. Now suppose receipts from sales come in uniformly during the month (that is, cash receipts come in at the rate of 130 each day), but all outflows must be paid on the 5th. Will this affect the cash budget? That is, will the cash budget you prepared be valid under these assumptions? If not, what could be done to make a valid estimate of the peak financing requirements? No calculations are required, although if you prefer, you can use calculations to illustrate the effects. d. Bowers sales are seasonal; and her company produces on a seasonal basis, just ahead of sales. Without making any calculations, discuss how the companys current and debt ratios would vary during the year if all financial requirements were met with short-term bank loans. Could changes in these ratios affect the firms ability to obtain bank credit? Explain.
CASH BUDGETING Helen Bowers, owner of Helens Fashion Designs, is planning to request a line of credit from her bank. She has estimated the following sales forecasts for the firm for parts of 2015 and 2016: May 2015 180,000 June 180,000 July 360,000 August 540,000 September 720,000 October 360,000 November 360,000 December 90,000 January 2016 180,000 Estimates regarding payments obtained from the credit department are as follows: collected within the month of sale, 10%; collected the month following the sale, 75%; collected the second month following the sale, 15%. Payments for labor and raw materials are made the month after these services were provided. Here are the estimated costs of labor plus raw materials: May 2015 90,000 June 90,000 July 126,000 August 882,000 September 306,000 October 234,000 November 162,000 December 90,000 General and administrative salaries are approximately 27,000 a month. Lease payments under long-term leases are 9,000 a month. Depreciation charges are 36,000 a month. Miscellaneous expenses are 2,700 a month. Income tax payments of 63,000 are due in September and December. A progress payment of 180,000 on a new design studio must be paid in October. Cash on hand on July 1 will be 132,000, and a minimum cash balance of 90,000 should be maintained throughout the cash budget period. a. Prepare a monthly cash budget for the last 6 months of 2015. b. Prepare monthly estimates of the required financing or excess fundsthat is, the amount of money Bowers will need to borrow or will have available to invest. c. Now suppose receipts from sales come in uniformly during the month (that is, cash receipts come in at the rate of 1 30 each day), but all outflows must be paid on the 5th. Will this affect the cash budget? That is, will the cash budget you prepared be valid under these assumptions? If not, what could be done to make a valid estimate of the peak financing requirements? No calculations are required, although if you prefer, you can use calculations to illustrate the effects. d. Bowers sales are seasonal; and her company produces on a seasonal basis, just ahead of sales. Without making any calculations, discuss how the companys current and debt ratios would vary during the year if all financial requirements were met with short-term bank loans. Could changes in these ratios affect the firms ability to obtain bank credit? Explain.
Analyze Johnson Stores staffing budget for holidays Johnson Stores is planning its staffing for the upcoming holiday season. From past history, the store determines that it needs one additional sales clerk for each 12,000 in daily sales. The average daily sales is anticipated to increase by 96,000 from Black Friday until Christmas Eve, or 27 shopping days. Each additional sales clerk will work an eight-hour shift and will be paid 14 per hour. A. Determine the amount to budget for additional sales clerks for the holiday season. B. If Johnson Stores has an average 40% gross profit on sales, should it add the staff suggested by your answer in (A)? That is, is it profitable to staff for the increased sales in (A)?
CASH BUDGET Richard LT Corporation is preparing its cash budget for the year 2015. Richard's beginning cash balance is P20,000. Sales are estimated to be at P500,000, 70% of which are on credit. A total of 80% of credit sales are expected to be collected in 2015. Cash expenditures for the year are forecasted to increase to P350,000, a 25% increase from previous year's balance. Accounts receivable from December 31, 2014 totalingP10,000 will be collected in the current year. The company is required to make a P50,000 loan payment and an annual interest payment on December 31, 2015. The loan balance as of December 31, 2014 is P100,000 and the annual interest rate is 12%. Prepare a cash budget for the year ended December 31. 2015 *