The projected sales for the Leeds Company is given below. The company has determined that all sales are on credit and they do not have any cash sales. For the credit sales, experience tells Leeds they will collect 60% of sales in the quarter of the sale and the remaining 40% is collected the quarter after the sale. The sales in the last quarter of the previous year is $200,000. Qtr I Qtr 2 Qtr 3 Qtr 4 Budgeted Sales $600,000 S1,600,000 S800,000 S1,000,000 Leeds need cash to pay for purchases, wages, rent, interest, income taxes, cash dividends, and most other expenses. Leeds Company is a manufacturing company, the material purchases requirement for the next four quarters is given in the following table. Leed Company makes all material purchases on credit. Leed Company will pay for material purchases 80% in the quarter of purchase and 20% in the quarter after the purchase. The materials purchased in the last quarter of previous years is $400,000. Budgeted Material Purchases $250,000 $295,000 $217,500 $217,500 Leed Company also needs cash payments for direct labor (all direct labor paid in the quarter it was incurred), cash payments for manufacturing overhead and cash payments for selling and administrative expenses which are listed in the following table. Further, the company assumes that $40,000 of dividends will be paid in the second quarter and $80,000 in the third quarter, Also, Leed plans to expand operations into a new building that will cost $650,000 in Quarter 4. Leed plans to pay cash for the new building. On January 1, Leed Company's cash balance was $130,000. Leeds Company like to keep at a minimum of $10,000 as their ending cash balance cach quarter. Prepare a cash budget for the next four quarters for the company. Leeds Company Schedule of Cash Payments Qtr 1 Qtr 2 Qtr 3 Qtr 4 Total Cash Pmts for Material Purchases 280,000 286,000 233,000 217,500
The projected sales for the Leeds Company is given below. The company has determined that all sales are on credit and they do not have any cash sales. For the credit sales, experience tells Leeds they will collect 60% of sales in the quarter of the sale and the remaining 40% is collected the quarter after the sale. The sales in the last quarter of the previous year is $200,000. Qtr I Qtr 2 Qtr 3 Qtr 4 Budgeted Sales $600,000 S1,600,000 S800,000 S1,000,000 Leeds need cash to pay for purchases, wages, rent, interest, income taxes, cash dividends, and most other expenses. Leeds Company is a manufacturing company, the material purchases requirement for the next four quarters is given in the following table. Leed Company makes all material purchases on credit. Leed Company will pay for material purchases 80% in the quarter of purchase and 20% in the quarter after the purchase. The materials purchased in the last quarter of previous years is $400,000. Budgeted Material Purchases $250,000 $295,000 $217,500 $217,500 Leed Company also needs cash payments for direct labor (all direct labor paid in the quarter it was incurred), cash payments for manufacturing overhead and cash payments for selling and administrative expenses which are listed in the following table. Further, the company assumes that $40,000 of dividends will be paid in the second quarter and $80,000 in the third quarter, Also, Leed plans to expand operations into a new building that will cost $650,000 in Quarter 4. Leed plans to pay cash for the new building. On January 1, Leed Company's cash balance was $130,000. Leeds Company like to keep at a minimum of $10,000 as their ending cash balance cach quarter. Prepare a cash budget for the next four quarters for the company. Leeds Company Schedule of Cash Payments Qtr 1 Qtr 2 Qtr 3 Qtr 4 Total Cash Pmts for Material Purchases 280,000 286,000 233,000 217,500
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter22: Providing And Obtaining Credit
Section: Chapter Questions
Problem 4MC
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Transcribed Image Text:The projected sales for the Leeds Company is given below. The company has determined that all
sales are on credit and they do not have any cash sales. For the credit sales, experience tells
Leeds they will collect 60% of sales in the quarter of the sale and the remaining 40% is collected
the quarter after the sale. The sales in the last quarter of the previous year is $200,000.
Qtr 1
Qtr 2
Qtr 3
Qtr 4
Budgeted Sales
S600,000
S1,600,000
S800,000
S1,000,000
Leeds need cash to pay for purchases, wages, rent, interest, income taxes, cash dividends, and
most other expenses. Leeds Company is a manufacturing company, the material purchases
requirement for the next four quarters is given in the following table. Leed Company makes all
material purchases on credit. Leed Company will pay for material purchases 80% in the quarter
of purchase and 20% in the quarter after the purchase. The materials purchased in the last
quarter of previous years is $400,000.
Budgeted Material Purchases
$250,000
$295,000
$217,500
$217,500
Leed Company also needs cash payments for direct labor (all direct labor paid in the quarter it
was incurred), cash payments for manufacturing overhead and cash payments for selling and
administrative expenses which are listed in the following table. Further, the company assumes
that $40,000 of dividends will be paid in the second quarter and S80,000 in the third quarter.
Also, Leed plans to expand operations into a new building that will cost $650,000 in Quarter 4.
Leed plans to pay cash for the new building. On January 1, Leed Company's cash balance was
$130,000. Leeds Company like to keep at a minimum of $10,000 as their ending cash balance
cach quarter. Prepare a cash budget for the next four quarters for the company.
Leeds Company
Schedule of Cash Payments
Qtr I
Qtr 2
Qtr 3
Qtr 4
Total Cash Pmts for Material Purchases
280,000
286,000
233,000
217,500
Budgeted direct labor dollars
126,000
192,000
132,000
156,000
Cash payments for mfg overhead
80,750
89.000
81,500
80,750
Cash payments for selling and admin
110,000
160,000
120,000
130,000
Cash payments for Income Taxes
100,000
57,500
270,000
100,000
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