Excel Applications for Accounting Principles
4th Edition
ISBN: 9781111581565
Author: Gaylord N. Smith
Publisher: Cengage Learning
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Textbook Question
Chapter 21, Problem 1R
On January 1, Sweet Pleasures, Inc., begins business. The company has $14,000 cash on hand and is attempting to project cash receipts and disbursements through April 30. On May 1, a note payable of $10,000 will be due. This amount was borrowed on January 1 to carry the company through its first four months of operation.
The unit purchase cost of the company’s single product, a box of Sweet Pleasures chocolates, is $12. The unit sales price is $28. Projected purchases and sales in units for the first four months are:
Sales terms call for a 5% discount if paid within the same month that the sale occurred. It is expected that 50% of the billings will be collected within the discount period, 25% by the end of the month after purchase, 19% in the following month, and 6% will be uncollectible.
Approximately 60% of the purchases are paid for in the month purchased. The rest are due and payable in the next month.
Total fixed marketing and administrative expenses for each month include cash expenses of $5,000 and
REQUIREMENT
You have been asked to prepare a
Expert Solution & Answer
To determine
Prepare a cash budget for the four months.
Explanation of Solution
Given data,
Figure (1)
Prepare a cash budget:
Figure (2)
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Chai Me, Inc., a merchandiser of herbal tea products, began operations on January 1. The company expects sales in its first month of operations to total $18,000. 80% of the sales are expected to be cash sales. The remaining sales are expected to be on account and will carry payment terms of net 30. The company estimates that 99% of its sales on account will be collected in the month following the month of sale. The remaining 1% is deemed uncollectible. The company will recognize bad debt expense under the allowance method of accounting for bad debts in the month in which the credit sales occur.
Inventory purchases during January are expected to equal $4,000. Purchases are paid for in the month of purchase. No purchase discounts are available.
Chai pays its sales staff a 10% commission on all sales made. The commission expense is recognized in the month of sale and is paid on the 10th of the following month. Chai’s expected fixed monthly operating expenses are $4,570.…
On July 8, Azure Corporation enters into an agreement with one of its customers, Madsen, Inc. to provide them with 4,500
units at a cost of $500 per unit. Madsen sends a cash deposit of $225,000 on the same day. Azure sends the first 2,700 units
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contract or about Madsen, Inc.'s ability and willingness to pay.
Prepare the journal entries to record the events (leaving out the accounting for Azure's costs).
Date
July 8
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September 15
October 15
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Account
To record the deposit.
To record initial delivery of units.
To collect cash on account.
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To collect cash on account.
<<…
Rooney Pointers Corporation expects to begin operations on January 1, year 1; it will operate as a specialty sales company that sells
laser pointers over the Internet. Rooney expects sales in January year 1 to total $380,000 and to increase 15 percent per month in
February and March. All sales are on account. Rooney expects to collect 67 percent of accounts receivable in the month of sale, 23
percent in the month following the sale, and 10 percent in the second month following the sale.
Required
a. Prepare a sales budget for the first quarter of year 1.
b. Determine the amount of sales revenue Rooney will report on the year 1 first quarterly pro forma income statement.
c. Prepare a cash receipts schedule for the first quarter of year 1.
d. Determine the amount of accounts receivable as of March 31, year 1.
Complete this question by entering your answers in the tabs below.
Required A
Required B
Required C
Required D
Prepare a sales budget for the first quarter of year 1.
Sales Budget…
Chapter 21 Solutions
Excel Applications for Accounting Principles
Ch. 21 - On January 1, Sweet Pleasures, Inc., begins...Ch. 21 - Open the file CASHBUD from the website for this...Ch. 21 - Can the 10,000 note be repaid on May 1? Explain.Ch. 21 - Prob. 4RCh. 21 - The following four suggestions have been made to...Ch. 21 - Reset cells to their initial values. Sweet...Ch. 21 - Prob. 7R
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