Sound Investments, Inc., is a large retailer of stereo equipment. The controller is about to prepare the budget for the first quarter of 20x2. Past experience has indicated that 70 percent of the store's sales are cash sales. The collection experience for the sales on account is as follows: 85 percent during month of sale 10 percent during month following sale 5 percent uncollectible The total sales for December 20x1 are expected to be $203,000. The controller feels that sales in January 20x2 could range from $113,000 to $173,000. Required: 1. Demonstrate how financial planning can be used to project cash receipts in January of 20x2 for three different levels of January sales. Use the following columnar format. Total Sales in January, 20x2 $ 113,000 $ 143,000 $ 173,000 Cash receipts in January 20x2: From December sales on account From January cash sales From January sales on account Total cash receipts $ 0 $ 0 $ 0

Sound Investments, Inc., is a large retailer of stereo equipment. The controller is about to prepare the budget for the first quarter of 20x2. Past experience has indicated that 70 percent of the store's sales are cash sales. The collection experience for the sales on account is as follows: 85 percent during month of sale 10 percent during month following sale 5 percent uncollectible The total sales for December 20x1 are expected to be $203,000. The controller feels that sales in January 20x2 could range from $113,000 to $173,000. Required: 1. Demonstrate how financial planning can be used to project cash receipts in January of 20x2 for three different levels of January sales. Use the following columnar format. Total Sales in January, 20x2 $ 113,000 $ 143,000 $ 173,000 Cash receipts in January 20x2: From December sales on account From January cash sales From January sales on account Total cash receipts $ 0 $ 0 $ 0

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Kimball Company manufactures drinking glasses. One unit is a package of eight glasses, which sells for $24. Kimball projects sales for April will be 2,500 packages, with sales increasing by 200 packages per month for May, June, and July. On April 1, Kimball has 100 packages on hand but desires to maintain an ending inventory of 20% of the next month's sales. Prepare a sales budget and a production budget for Kimball for April, May, and June. Begin by preparing a sales budget for April, May, and June. Kimball Company Sales Budget April, May, and June April May Budgeted packages to be sold Sales price per package Total sales 697 2,500 2,700 24 $ 60,000 $ 64,800 24 $ $ June 2,900 Total 8,100 24 24 $ 69,600 $ 194,400
The controller of Sonoma Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information: May June July Sales $128,000 $156,000 $218,000 Manufacturing costs 54,000 67,000 78,000 Selling and administrative expenses 37,000 42,000 48,000 Capital expenditures _ _ 52,000 The company expects to sell about 12% of its merchandise for cash. Of sales on account, 60% 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 September, and the annual property taxes are paid in November. 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 May 1…
Munoz Company is a retail company that specializes in selling outdoor camping equipment. The company is considering opening a new store on October 1, year 1. The company president formed a planning committee to prepare a master budget for the first three months of operation. As budget coordinator, you have been assigned the following tasks. Required a. October sales are estimated to be $340,000, of which 40 percent will be cash and 60 percent will be credit. The company expects sales to increase at the rate of 20 percent per month. Prepare a sales budget. b. The company expects to collect 100 percent of the accounts receivable generated by credit sales in the month following the sale. Prepare a schedule of cash receipts. c. The cost of goods sold is 70 percent of sales. The company desires to maintain a minimum ending inventory equal to 20 percent of the next month's cost of goods sold. However, ending inventory of December is expected to be $12,900. Assume that all purchases are made…
A company is preparing its cash budget for the upcoming quarter. The company's sales are expected to be $500,000 in January, $600,000 in February, and $700,000 in March. The company's cost of goods sold is 60% of sales. The company's beginning cash balance is $50,000, and the company desires to maintain a minimum cash balance of $25,000. How much financing does the company need in February? $25,000 $60,000 $0 $35,000
Garden Depot is a retailer that is preparing its budget for the upcoming fiscal year. Management has prepared the following summary of its budgeted cash flows: Total cash receipts Total cash disbursements 1st Quarter $ 210,000 $ 281,000 The company's beginning cash balance for the upcoming fiscal year will be $26,000. The company requires a minimum cash balance of $10,000 and may borrow any amount needed from a local bank at a quarterly interest rate of 3%. The company may borrow any amount at the beginning of any quarter and may repay its loans, or any part of its loans, at the end of any quarter. Interest payments are due on any principal at the time it is repaid. For simplicity, assume that interest is not compounded. Beginning cash balance Total cash receipts Total cash available Total cash disbursements Excess (deficiency) of cash available over disbursements Financing: Borrowings Repayments Interest Required: Prepare the company's cash budget for the upcoming fiscal year.…
esc Pasta Disasta, Inc. is preparing its master budget for its first quarter of business. It expects to sell 4,000 pizzas per month. It will purchase enough pizzas so that 100 pizzas are in inventory at all times. The pizza is expected to cost $3 per pizza. It expects to pay 70% in the month of purchase and the remainder in the following month. Calculate the amount of budgeted purchases for its first quarter. Click Save and Submit to save and submit. Click Save All Answers to save all answers. 1 Q A 1 N 2 W S #3 X H E D $ 4 C R 67 dº % 5 F MacBook Pro T V 6 G Y & V lo 7 H B * 00 8 U J N 9 K M Sa
Mary and Kay, Inc., a distributor of cosmetics throughout Florida, is in the process of assembling a cash budget for the first quarter of 20x1. The following information has been extracted from the company’s accounting records: •All sales are on account. Sixty percent of customer accounts are collected in the month of sale; 35 percent are collected in the following month. Uncollectibles amounting to 5 percent of sales are anticipated, and management believes that only 20 percent of the accounts outstanding on December 31, 20x0, will be recovered and that the recovery will be in January 20x1. •Seventy percent of the merchandise purchases are paid for in the month of purchase; the remaining 30 percent are paid for in the month after acquisition. •The December 31, 20x0, balance sheet disclosed the following selected figures: cash, $20,000; accounts receivable, $55,000; and accounts payable, $22,000. •Mary and Kay, Inc., maintains a $20,000 minimum cash balance at…
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: Line Item Description Sales September October November $103,000 $122,000 $166,000 Manufacturing costs 43,000 52,000 60,000 Selling and administrative expenses Capital expenditures 36,000 37,000 63,000 40,000 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 $10,000 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…
Cheddar's Café is preparing its cash budget for August. At the beginning of the month, the café expects to have $17,500 in total available cash. Over the course of the month, it expects to make $12,250 in cash disbursements and obtain $3,750 in financing. What is Cheddar's anticipated ending cash balance for August? O $9,000 O $5,250 O $26,000 O $1,500
Old Antique Store prepared the following budget information for the month of May: Sales are budgeted at $303,000. All sales are on account and a provision for bad debts is made for each month at three percent of sales for the month. Inventory was $91,000 on April 30; an inventory increase of $17,000 is planned for May 31. All inventory is marked to sell at cost plus 50 percent. Estimated cash disbursements for selling and administrative expenses for the month are $55,000. Depreciation for May is projected at $6,700. Old Antique's budgeted cost of inventory purchases for May is:Multiple Choice $101,000. $151,500. $203,200. $219,000. $202,000.
Kingbird needs to calculate the company’s expected cash receipts for the upcoming month to determine whether additional financing is needed. Typically, the company’s sales consist of 40% cash sales and 60% credit sales. Of the credit sales, 55% are collected in the same month, and 42% are collected in the following month. The remainder is generally uncollected. Total budgeted sales in June are $136,000 and in July are $186,000. What amount of total cash receipts would Kingbird expect to collect in July? Total cash receipts $enter the total cash receipts in dollars