The accounting team at Kingbird Corp. plans to get a jump-start on its budget for the second quarter, since the first quarter is going well. Team members want to make sure to determine the cash effects of the company’s sales as well as its biggest production-related cash expenditure, direct materials. The team has gathered the following information: 1. The budgeted selling price for the year is $4.00 per unit. Sales volumes are budgeted as follows for the last month of quarter 1, for all of quarter 2, and for part of quarter 3. March April May June July August 23,800 22,000 25,500 27,800 23,500 23,300 2. Historically, 25% of Kingbird’s sales are cash sales. Of the remaining credit sales, 40% are collected in the month of sale, while 56% are collected the following month. The remainder is deemed uncollectible. 3. Management sets its ending FG Inventory goal at 10% of the following month’s sales volume. The accounting team expects this policy will be met at the beginning of the second quarter. 4. The target ending inventory for Kingbird’s primary direct material is 20% of the following month’s production needs, since it’s not unusual for suppliers to stock out of this key resource. Each completed unit requires 4 pounds of DM at an expected cost of $0.40 per pound. 5. Kingbird pays for 35% of its purchases in the month of purchase and 65% the month after purchase. Total budgeted purchases in March are $16,300. For all quarterly budgets, report monthly amounts as well as the total for the quarter. (a) Prepare the sales forecast and corresponding cash receipts budget for Kingbird Corp. for its second quarter. (Round budgeted selling price per unit to 2 decimal places, e.g. 15.25.) Sales Budget April May June Quarter select an opening sales budget item enter a number of units enter a number of units enter a number of units enter a number of units select a sales budget item $enter a dollar amount rounded to 2 decimal places $enter a dollar amount rounded to 2 decimal places $enter a dollar amount rounded to 2 decimal places $enter a dollar amount rounded to 2 decimal places select a closing sales budget item $enter a total amount for the sales budget $enter a total amount for the sales budget $enter a total amount for the sales budget $enter a total amount for the sales budget (Round answers to 2 decimal places, e.g. 15.25.) Cash Collections Budget April May June Quarter Beginning A/R (April) $enter a dollar amount rounded to 2 decimal places $enter a dollar amount rounded to 2 decimal places $enter a dollar amount rounded to 2 decimal places $enter a dollar amount rounded to 2 decimal places April cash sales enter a dollar amount rounded to 2 decimal places enter a dollar amount rounded to 2 decimal places enter a dollar amount rounded to 2 decimal places enter a dollar amount rounded to 2 decimal places April credit sales enter a dollar amount rounded to 2 decimal places enter a dollar amount rounded to 2 decimal places enter a dollar amount rounded to 2 decimal places enter a dollar amount rounded to 2 decimal places May cash sales enter a dollar amount rounded to 2 decimal places enter a dollar amount rounded to 2 decimal places enter a dollar amount rounded to 2 decimal places enter a dollar amount rounded to 2 decimal places May credit sales enter a dollar amount rounded to 2 decimal places enter a dollar amount rounded to 2 decimal places enter a dollar amount rounded to 2 decimal places enter a dollar amount rounded to 2 decimal places June cash sales enter a dollar amount rounded to 2 decimal places enter a dollar amount rounded to 2 decimal places enter a dollar amount rounded to 2 decimal places enter a dollar amount rounded to 2 decimal places June credit sales enter a dollar amount rounded to 2 decimal places enter a dollar amount rounded to 2 decimal places enter a dollar amount rounded to 2 decimal places enter a dollar amount rounded to 2 decimal places Total cash receipts

The accounting team at Kingbird Corp. plans to get a jump-start on its budget for the second quarter, since the first quarter is going well. Team members want to make sure to determine the cash effects of the company’s sales as well as its biggest production-related cash expenditure, direct materials. The team has gathered the following information: 1. The budgeted selling price for the year is $4.00 per unit. Sales volumes are budgeted as follows for the last month of quarter 1, for all of quarter 2, and for part of quarter 3. March April May June July August 23,800 22,000 25,500 27,800 23,500 23,300 2. Historically, 25% of Kingbird’s sales are cash sales. Of the remaining credit sales, 40% are collected in the month of sale, while 56% are collected the following month. The remainder is deemed uncollectible. 3. Management sets its ending FG Inventory goal at 10% of the following month’s sales volume. The accounting team expects this policy will be met at the beginning of the second quarter. 4. The target ending inventory for Kingbird’s primary direct material is 20% of the following month’s production needs, since it’s not unusual for suppliers to stock out of this key resource. Each completed unit requires 4 pounds of DM at an expected cost of $0.40 per pound. 5. Kingbird pays for 35% of its purchases in the month of purchase and 65% the month after purchase. Total budgeted purchases in March are $16,300. For all quarterly budgets, report monthly amounts as well as the total for the quarter. (a) Prepare the sales forecast and corresponding cash receipts budget for Kingbird Corp. for its second quarter. (Round budgeted selling price per unit to 2 decimal places, e.g. 15.25.) Sales Budget April May June Quarter select an opening sales budget item enter a number of units enter a number of units enter a number of units enter a number of units select a sales budget item $enter a dollar amount rounded to 2 decimal places $enter a dollar amount rounded to 2 decimal places $enter a dollar amount rounded to 2 decimal places $enter a dollar amount rounded to 2 decimal places select a closing sales budget item $enter a total amount for the sales budget $enter a total amount for the sales budget $enter a total amount for the sales budget $enter a total amount for the sales budget (Round answers to 2 decimal places, e.g. 15.25.) Cash Collections Budget April May June Quarter Beginning A/R (April) $enter a dollar amount rounded to 2 decimal places $enter a dollar amount rounded to 2 decimal places $enter a dollar amount rounded to 2 decimal places $enter a dollar amount rounded to 2 decimal places April cash sales enter a dollar amount rounded to 2 decimal places enter a dollar amount rounded to 2 decimal places enter a dollar amount rounded to 2 decimal places enter a dollar amount rounded to 2 decimal places April credit sales enter a dollar amount rounded to 2 decimal places enter a dollar amount rounded to 2 decimal places enter a dollar amount rounded to 2 decimal places enter a dollar amount rounded to 2 decimal places May cash sales enter a dollar amount rounded to 2 decimal places enter a dollar amount rounded to 2 decimal places enter a dollar amount rounded to 2 decimal places enter a dollar amount rounded to 2 decimal places May credit sales enter a dollar amount rounded to 2 decimal places enter a dollar amount rounded to 2 decimal places enter a dollar amount rounded to 2 decimal places enter a dollar amount rounded to 2 decimal places June cash sales enter a dollar amount rounded to 2 decimal places enter a dollar amount rounded to 2 decimal places enter a dollar amount rounded to 2 decimal places enter a dollar amount rounded to 2 decimal places June credit sales enter a dollar amount rounded to 2 decimal places enter a dollar amount rounded to 2 decimal places enter a dollar amount rounded to 2 decimal places enter a dollar amount rounded to 2 decimal places Total cash receipts

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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(a)

Prepare the sales forecast and corresponding cash receipts budget for Kingbird Corp. for its second quarter. (Round budgeted selling price per unit to 2 decimal places, e.g. 15.25.)

Sales Budget	April	May	June	Quarter
select an opening sales budget item	enter a number of units	enter a number of units	enter a number of units	enter a number of units
select a sales budget item	$enter a dollar amount rounded to 2 decimal places	$enter a dollar amount rounded to 2 decimal places	$enter a dollar amount rounded to 2 decimal places	$enter a dollar amount rounded to 2 decimal places
select a closing sales budget item	$enter a total amount for the sales budget	$enter a total amount for the sales budget	$enter a total amount for the sales budget	$enter a total amount for the sales budget

(Round answers to 2 decimal places, e.g. 15.25.)

Total cash receipts
Cash Collections Budget	April	May	June	Quarter
Beginning A/R (April)	$enter a dollar amount rounded to 2 decimal places	$enter a dollar amount rounded to 2 decimal places	$enter a dollar amount rounded to 2 decimal places	$enter a dollar amount rounded to 2 decimal places
April cash sales	enter a dollar amount rounded to 2 decimal places	enter a dollar amount rounded to 2 decimal places	enter a dollar amount rounded to 2 decimal places	enter a dollar amount rounded to 2 decimal places
April credit sales	enter a dollar amount rounded to 2 decimal places	enter a dollar amount rounded to 2 decimal places	enter a dollar amount rounded to 2 decimal places	enter a dollar amount rounded to 2 decimal places
May cash sales	enter a dollar amount rounded to 2 decimal places	enter a dollar amount rounded to 2 decimal places	enter a dollar amount rounded to 2 decimal places	enter a dollar amount rounded to 2 decimal places
May credit sales	enter a dollar amount rounded to 2 decimal places	enter a dollar amount rounded to 2 decimal places	enter a dollar amount rounded to 2 decimal places	enter a dollar amount rounded to 2 decimal places
June cash sales	enter a dollar amount rounded to 2 decimal places	enter a dollar amount rounded to 2 decimal places	enter a dollar amount rounded to 2 decimal places	enter a dollar amount rounded to 2 decimal places
June credit sales	enter a dollar amount rounded to 2 decimal places	enter a dollar amount rounded to 2 decimal places	enter a dollar amount rounded to 2 decimal places	enter a dollar amount rounded to 2 decimal places

Definition Definition Estimate of an organization's cash flow for a future period. A cash budget forecasts future cash receipts and payments from various sources for a fiscal year. A cash budget can be created once a month or once a week to determine the organization's cash position and ensure its performance in relation to the budget. It aids in determining whether the company has enough cash and cash equivalents to meet its operational needs in the future.

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