The following data relate to the operations of Picanuy Corporation, a wholesale distributor of consumer goods: a. b. Current assets as of December 31: Cash. Accounts receivable Inventory Buildings and equipment, net. Accounts payable Capital stock. Retained earnings. $6,000 $36,000 $9,800 December (actual) $110,885 $32,550. $100,000. $30,135 The gross margin is 30% of sales. (In other words, cost of goods sold is 70% of sales.) Actual and budgeted sales data are as follows: $60.000 ---------
The following data relate to the operations of Picanuy Corporation, a wholesale distributor of consumer goods: a. b. Current assets as of December 31: Cash. Accounts receivable Inventory Buildings and equipment, net. Accounts payable Capital stock. Retained earnings. $6,000 $36,000 $9,800 December (actual) $110,885 $32,550. $100,000. $30,135 The gross margin is 30% of sales. (In other words, cost of goods sold is 70% of sales.) Actual and budgeted sales data are as follows: $60.000 ---------
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
100%
Explain how these answers were solved. Start at - Excess Deficency of cash, all the way to cash balance ending.
![Cash budget:
Cash balance, beginning....
Add cash collections.
Total cash available.....
Less cash disbursements:
For inventory......
For operating expenses..
For equipment...
Total disbursements
Excess (deficiency) of cash
Financing:
Borrowings.
Repayments.
Interest*.
Total financing
Cash balance, ending.
* $3,000 x 1% x 3 =
$6,000 x 1% x 2 =
Total interest
January February
$ 6,000
64,000
70,000
45,150
51,975
19,400 20,200
3,000
8,000
67,550
80,175
2,450
3,000
0
0
3,000
$5,450
March
$ 5,450 $ 5,275
74,000 82,000 220,000
79,450
87,275
226,000
$90
120
$210
(725)
6,000
0
0
Quarter
$ 6,000
6,000
$5,275
56,350 153,475
20,600
60,200
0
11,000
76,950
224,675
1,325
10,325
9,000
(5,000)
(210)
0
(5,000)
(210)
(5,210)
$5,115 $5,115
3,790](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F75fb4f79-5bfb-4902-85d2-e1edc76b1d17%2F783c71a3-3d92-4d0c-88db-754866522a6b%2F802v9wo_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Cash budget:
Cash balance, beginning....
Add cash collections.
Total cash available.....
Less cash disbursements:
For inventory......
For operating expenses..
For equipment...
Total disbursements
Excess (deficiency) of cash
Financing:
Borrowings.
Repayments.
Interest*.
Total financing
Cash balance, ending.
* $3,000 x 1% x 3 =
$6,000 x 1% x 2 =
Total interest
January February
$ 6,000
64,000
70,000
45,150
51,975
19,400 20,200
3,000
8,000
67,550
80,175
2,450
3,000
0
0
3,000
$5,450
March
$ 5,450 $ 5,275
74,000 82,000 220,000
79,450
87,275
226,000
$90
120
$210
(725)
6,000
0
0
Quarter
$ 6,000
6,000
$5,275
56,350 153,475
20,600
60,200
0
11,000
76,950
224,675
1,325
10,325
9,000
(5,000)
(210)
0
(5,000)
(210)
(5,210)
$5,115 $5,115
3,790
![The following data relate to the operations of Picanuy Corporation, a wholesale distributor of
consumer goods:
a.
b.
C.
d.
e.
f.
g.
h.
Current assets as of December 31:
Cash.
Accounts receivable
Inventory..
Buildings and equipment, net.
Accounts payable
Capital stock..
Retained earnings.
$6,000
$36,000
$9,800
$110,885
$32,550.
$100,000.
$30,135
The gross margin is 30% of sales. (In other words, cost of goods sold is 70% of sales.)
Actual and budgeted sales data are as follows:
December (actual).
January.
February..
March..
April
$60,000
$70,000
$80,000
$85,000
$55,000.
Sales are 40% for cash and 60% on credit. Credit sales are collected in the month following
sale. The accounts receivable at December 31 are the result of December credit sales.
Each month's ending inventory should equal 20% of the following month's budgeted cost of
goods sold.
One-quarter of a month's inventory purchases is paid for in the month of purchase; the other
three-quarters is paid for in the following month. The accounts payable at December 31 are
the result of December purchases of inventory.
Monthly expenses are as follows: commissions, $12,000; rent, $1,800; other expenses (exclud-
ing depreciation), 8% of sales. Assume that these expenses are paid monthly. Depreciation is
$2,400 for the quarter and includes depreciation on new assets acquired during the quarter.
Equipment will be acquired for cash: $3,000 in January and $8,000 in February.
Management would like to maintain a minimum cash balance of $5,000 at the end of each
month. The company has an agreement with a local bank that allows the company to borrow
in increments of $1,000 at the beginning of each month, up to a total loan balance of $50,000.
The interest rate on these loans is 1% per month, and for simplicity, we will assume that inter-
est is not compounded. The company would, as far as it is able, repay the loan plus accumu-
lated interest at the end of the quarter.
moth](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F75fb4f79-5bfb-4902-85d2-e1edc76b1d17%2F783c71a3-3d92-4d0c-88db-754866522a6b%2Fl01tqx_processed.jpeg&w=3840&q=75)
Transcribed Image Text:The following data relate to the operations of Picanuy Corporation, a wholesale distributor of
consumer goods:
a.
b.
C.
d.
e.
f.
g.
h.
Current assets as of December 31:
Cash.
Accounts receivable
Inventory..
Buildings and equipment, net.
Accounts payable
Capital stock..
Retained earnings.
$6,000
$36,000
$9,800
$110,885
$32,550.
$100,000.
$30,135
The gross margin is 30% of sales. (In other words, cost of goods sold is 70% of sales.)
Actual and budgeted sales data are as follows:
December (actual).
January.
February..
March..
April
$60,000
$70,000
$80,000
$85,000
$55,000.
Sales are 40% for cash and 60% on credit. Credit sales are collected in the month following
sale. The accounts receivable at December 31 are the result of December credit sales.
Each month's ending inventory should equal 20% of the following month's budgeted cost of
goods sold.
One-quarter of a month's inventory purchases is paid for in the month of purchase; the other
three-quarters is paid for in the following month. The accounts payable at December 31 are
the result of December purchases of inventory.
Monthly expenses are as follows: commissions, $12,000; rent, $1,800; other expenses (exclud-
ing depreciation), 8% of sales. Assume that these expenses are paid monthly. Depreciation is
$2,400 for the quarter and includes depreciation on new assets acquired during the quarter.
Equipment will be acquired for cash: $3,000 in January and $8,000 in February.
Management would like to maintain a minimum cash balance of $5,000 at the end of each
month. The company has an agreement with a local bank that allows the company to borrow
in increments of $1,000 at the beginning of each month, up to a total loan balance of $50,000.
The interest rate on these loans is 1% per month, and for simplicity, we will assume that inter-
est is not compounded. The company would, as far as it is able, repay the loan plus accumu-
lated interest at the end of the quarter.
moth
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