The controller of Mercury Shoes Inc. instructs you to prepare a monthly cash budget for the next threemonths. You are presented with the following budget information:SalesSales/CostsManufacturing costsSelling and admin. expensesCapital expensesApril$150,00066,00040,0000May$175,00087,00046,0000June$195,000115,00051,000120,000The company expects to sell about 15% of its merchandise for cash. Of sales on account, 70% areexpected to be collected in the month following the sale and the remainder the following month(second month after sale). Depreciation, insurance, and property tax expense represent $12,000 of theestimated monthly manufacturing costs. The annual insurance premium is paid in December, and theannual property taxes are paid in September. Of the remainder of the manufacturing costs, 80% areexpected to be paid in the month in which they are incurred and the balance in the following month.Current assets as of April 1 include cash of $42,000, marketable securities of $25,000, and accountsreceivable of $198,000 ($150,000 from March sales and $48,000 from February sales). Sales on accountin February and March were $120,000 and $150,000, respectively. Current liabilities as of April 1 include$14,000 of accounts payable incurred in March for manufacturing costs. All selling and administrativeexpenses are paid in cash in the period they are incurred. An estimated income tax payment of $24,000will be made in May. Mercury Shoes' regular quarterly dividend of $15,000 is expected to be declared inMay and paid in June. Management desires to maintain a minimum cash balance of $40,000.a. Prepare a monthly cash budget and supporting schedules for April, May, and June.b.On the basis of the cash budget prepared in part (a), what recommendation should be made tothe controller.

Cash budget A cash budget is an estimate of a company's cash inflows and expenditures over a…

The controller of Mercury Shoes Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information: Sales Sales/Costs Manufacturing costs Selling and admin. expenses Capital expenses April $150,000 66,000 40,000 0 May $175,000 87,000 46,000 0 June $195,000 115,000 51,000 120,000 The company expects to sell about 15% 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 after sale). Depreciation, insurance, and property tax expense represent $12,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in December, and the

The controller of Mercury Shoes Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information: Sales Sales/Costs Manufacturing costs Selling and admin. expenses Capital expenses April $150,000 66,000 40,000 0 May $175,000 87,000 46,000 0 June $195,000 115,000 51,000 120,000 The company expects to sell about 15% 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 after sale). Depreciation, insurance, and property tax expense represent $12,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in December, and the

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter9: Profit Planning And Flexible Budgets

Section: Chapter Questions

Problem 45BEB: Pilsner Inc. purchases raw materials on account for use in production. The direct materials...

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Echo Amplifiers prepared the following sales budget for the first quarter of 2018: It also has this additional information related to its expenses: Prepare a sales and administrative expense budget for each month in the quarter ending March 31, 2018.
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Classique Household Furnishings & Appliances is a family-owned furniture store. You are themanagement accountant of the concern and have been given the task of preparing the cash budget for thebusiness for the quarter ending September 30, 2018. Your data collection has yielded the following:i) Extracts from the sales and purchases budgets are as follows: MonthCashSalesSalesOn AccountPurchasesOn AccountMay $50,000 $480,000 $390,000June $65,000 $600,000 $360,000July $43,400 $720,000 $450,000August $52,800 $640,000 $400,000September $56,750 $800,000 $500,000ii) An analysis of the records shows that trade receivables (accounts receivable) for sales on accountare settled according to the following credit pattern, in accordance with the credit terms 5/30, n90:50% in the month of sale35% in the first month following the sale15% in the second month following the saleiii) Accounts payable are settled as follows, in accordance with the credit terms – 4/30, n60:70% in the month in which the…
Classique Household Furnishings & Appliances is a family-owned furniture store. You are themanagement accountant of the concern and have been given the task of preparing the cash budget for thebusiness for the quarter ending September 30, 2018. Your data collection has yielded the following:i) Extracts from the sales and purchases budgets are as follows:MonthCashSalesSalesOn AccountPurchasesOn AccountMay $50,000 $480,000 $390,000June $65,000 $600,000 $360,000July $43,400 $720,000 $450,000August $52,800 $640,000 $400,000September $56,750 $800,000 $500,000ii) An analysis of the records shows that trade receivables (accounts receivable) for sales on accountare settled according to the following credit pattern, in accordance with the credit terms 5/30, n90:50% in the month of sale35% in the first month following the sale15% in the second month following the saleiii) Accounts payable are settled as follows, in accordance with the credit terms – 4/30, n60:70% in the month in which the…
Parkerson Co. is an auto-store. You are the management accountant of the concern and have been given the task of preparing the cash budget for the business for the quarter ending March 31, 2021. Your data collection has yielded the following: I. Extracts from the sales and purchases budgets are as follows: Month November 2020 – March 2021 Cash Sales Sales On Account Purchases November $151,100 $480,000 $390,000 December $145,500 $600,000 $360,000 January $159,025 $700,000 $505,000 February $169,350 $650,000 $400,000 March $176,200 $800,000 $518,000 ii. An analysis of the records shows that trade receivables (accounts receivable) are settled according to the following credit pattern, in accordance with the credit terms 2/30, n90: 45% in the month of sale 30% in the first month following the sale 25% in the second month following the sale iii. Expected purchases include cash purchases of $25,000 in January and $18,000 in…
Classique Household Furnishings & Appliances is a family-owned furniture store. You are the management accountant of the concern and have been given the task of preparing the cash budget for the business for the quarter ending September 30, 2018. Your data collection has yielded the following: i)          Extracts from the sales and purchases budgets are as follows: Month Cash Sales Sales On Account Purchases On Account May $50,000 $480,000 $390,000 June $65,000 $600,000 $360,000 July $43,400 $720,000 $450,000 August $52,800 $640,000 $400,000 September $56,750 $800,000 $500,000 ii)            An analysis of the records shows that trade receivables (accounts receivable) for sales on account are settled according to the following credit pattern, in accordance with the credit terms 5/30, n90: 50% in the month of sale 35% in the first month following the sale 15% in the second month following the sale iii)…
Classique Household Furnishings & Appliances is a family-owned furniture store. You are the management accountant of the concern and have been given the task of preparing the cash budget for the business for the quarter ending September 30, 2018. Your data collection has yielded the following: i)          Extracts from the sales and purchases budgets are as follows: Month Cash Sales Sales On Account Purchases On Account May $50,000 $480,000 $390,000 June $65,000 $600,000 $360,000 July $43,400 $720,000 $450,000 August $52,800 $640,000 $400,000 September $56,750 $800,000 $500,000 ii)            An analysis of the records shows that trade receivables (accounts receivable) for sales on account are settled according to the following credit pattern, in accordance with the credit terms 5/30, n90: 50% in the month of sale 35% in the first month following the sale 15% in the second month following the sale iii)…
Classique Household Furnishings & Appliances is a family-owned furniture store. You are the management accountant of the concern and have been given the task of preparing the cash budget for the business for the quarter ending September 30, 2018. Your data collection has yielded the following: i)          Extracts from the sales and purchases budgets are as follows: Month Cash Sales Sales On Account Purchases On Account May $50,000 $480,000 $390,000 June $65,000 $600,000 $360,000 July $43,400 $720,000 $450,000 August $52,800 $640,000 $400,000 September $56,750 $800,000 $500,000 ii)            An analysis of the records shows that trade receivables (accounts receivable) for sales on account are settled according to the following credit pattern, in accordance with the credit terms: 50% in the month of sale 35% in the first month following the sale 15% in the second month following the sale iii)           Accounts…
The management accountant at L & P Merchandising & More, Michael Stona, is in theprocess of preparing the cash budget for the business for the quarter ending December31, 2020. Extracts from the sales and purchases budgets are as follows:Month2020CashSalesSalesOnAccountPurchasesOnAccountAugust $121,000 $480,000 $390,000September $95,500 $600,000 $360,000October $132,680 $720,000 $480,000November $105,900 $650,000 $400,000December $216,000 $800,000 $500,000(i) An analysis of the records shows that trade receivables (accounts receivable) aresettled according to the following credit pattern, in accordance with the creditterms 5/30, n90:60% in the month of sale30% in the first month following the sale10% in the second month following the sale(ii) Accounts payable are settled as follows, in accordance with the credit terms 3/30,n60:80% in the month in which the inventory is purchased20% in the following month(iii) During November, the management of L & P Merchandising expects to…
The management accountant at L & P Merchandising & More, Michael Stona, is in theprocess of preparing the cash budget for the business for the quarter ending December31, 2020. Extracts from the sales and purchases budgets are as follows:Month2020CashSalesSalesOnAccountPurchasesOnAccountAugust $121,000 $480,000 $390,000September $95,500 $600,000 $360,000October $132,680 $720,000 $480,000November $105,900 $650,000 $400,000December $216,000 $800,000 $500,000(i) An analysis of the records shows that trade receivables (accounts receivable) aresettled according to the following credit pattern, in accordance with the creditterms 5/30, n90:60% in the month of sale30% in the first month following the sale10% in the second month following the sale(ii) Accounts payable are settled as follows, in accordance with the credit terms 3/30,n60:80% in the month in which the inventory is purchased20% in the following month(iii) During November, the management of L & P Merchandising expects to…
You are the management accountant of the concern and have been given the task of preparing the cash budget for the business for the quarter ending March 31, 2021. (i) Extracts from the sales and purchases budgets are as follows: Month Cash Sales Sales on Account Purchases November $151,100 $480,000 $390,000 December $145,500 $600,000 $360,000 January $159,025 $700,000 $505,000 February $169,350 $650,000 $400,000 March $176,200 $800,000 $518,000 (ii) An analysis of the records shows that accounts receivable are settled according to the following credit pattern, in accordance with the credit terms 2/30, n90: 45% in the month of sale 30%…