Financial And Managerial Accounting
15th Edition
ISBN: 9781337902663
Author: WARREN, Carl S.
Publisher: Cengage Learning,
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Textbook Question
Chapter 22, Problem 9DQ
- A. Discuss the purpose of the
cash budget . - B. If the cash for the first quarter of the fiscal year indicates excess cash at the end of each of the first two months, how might the excess cash be used?
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LB Enterprises (LB) is preparing its budget for the first quarter of 2019. LB's balance sheet as of December 31, 2018
is as follows:
Assets
Liabilities
Cash
$5,000
Accounts Payable
$9500
Accounts Recievable
28,000
Inventories
Direct Materials
8,100
Finished Goods (500
Units)
16,870
Stockholders Equity
Equipment - gross
45,000
Accumulated depreciation
15.000
Common Stock
$15,000
Net Equipment
30,000
Retained Earnings
63,470
Total Assets
$87,970
Total Liabilities and
$87,960
Equity
LB sells one product for $45/unit. The Company forecasts that it will sell 2,000; 1,500; 1,600; and 1,700 units
in January, February, March and April, respectively.
• Sales to customers are all on credit. 40% of the cash for these sales is collected in the month of the sale and
the remaining 60% is collected in the following month.
LB wants finished goods inventory equal to 25% of the next month's sales on hand at the end of each
month.
LB wants direct materials equal to 75% of the current month's production…
If the company wants to find out the likely balance of cash in hand at the end of July, August and September 2021. Which of the following helps the company to fulfill their objective?
a. Purchase budget
b. Cash budget
c Sales budget
d. Materials budget
A. Prepare Cash Budget for the period of 6 months from July to December 2020. B. Explain the advantages and disadvantages of cash budgeting.
Chapter 22 Solutions
Financial And Managerial Accounting
Ch. 22 - Prob. 1DQCh. 22 - Briefly describe the type of human behavior...Ch. 22 - What behavioral problems are associated with...Ch. 22 - What behavioral problems are associated with...Ch. 22 - Under what circumstances would a static budget be...Ch. 22 - Prob. 6DQCh. 22 - Why should the production requirements set forth...Ch. 22 - Why should the timing of direct materials...Ch. 22 - A. Discuss the purpose of the cash budget. B. If...Ch. 22 - Give an example of how the capital expenditures...
Ch. 22 - At the beginning of the period, the Fabricating...Ch. 22 - Pasadena Candle Inc. projected sales of 800,000...Ch. 22 - Pasadena Candle Inc. budgeted production of...Ch. 22 - Pasadena Candle Inc. budgeted production of...Ch. 22 - Prepare a cost of goods sold budget for Pasadena...Ch. 22 - Prob. 6BECh. 22 - At the beginning of the school year, Craig Kovar...Ch. 22 - Digital Solutions Inc. uses flexible budgets that...Ch. 22 - Static budget versus flexible budget The...Ch. 22 - Flexible budget for Assembly Department Steelcase...Ch. 22 - Production budget Healthy Measures Inc. produces a...Ch. 22 - Sales and production budgets Sonic Inc....Ch. 22 - Professional foes earned budget for a service...Ch. 22 - Professional labor cost budget for a service...Ch. 22 - Direct materials purchases budget Tobins Frozen...Ch. 22 - Direct materials purchases budget Coca-Cola...Ch. 22 - Direct materials purchases budget Anticipated...Ch. 22 - Direct labor cost budget Ace Racket Company...Ch. 22 - Production and direct labor cost budgets Levi...Ch. 22 - Factory overhead cost budget Sweet Tooth Candy...Ch. 22 - Cost of goods sold budget Delaware Chemical...Ch. 22 - Cost of goods sold budget The controller of...Ch. 22 - Schedule of cash collections of accounts...Ch. 22 - Schedule of cash collections of accounts...Ch. 22 - Schedule of cash payments for service company...Ch. 22 - Schedule of cash payments for a service company...Ch. 22 - Capital expenditures budget On January 1, 20Y6,...Ch. 22 - Forecast sales volume and sales budget For 20Y8,...Ch. 22 - Sales, production, direct materials purchases, and...Ch. 22 - Budgeted income statement and supporting budgets...Ch. 22 - Budgeted income statement and supporting budgets...Ch. 22 - Cash budget The controller of Bridgeport...Ch. 22 - Budgeted income statement and balance sheet As a...Ch. 22 - Forecast sales volume and sales budget Sentinel...Ch. 22 - Sales, production, direct materials purchases, and...Ch. 22 - Budgeted income statement and supporting budgets...Ch. 22 - Prob. 4PBCh. 22 - Cash budget The controller of Mercury Shoes Inc....Ch. 22 - Budgeted income statement and balance sheet As a...Ch. 22 - Analyze Johnson Stores staffing budget for...Ch. 22 - Nursing staff budget Mercy Hospital staffs its...Ch. 22 - Parking lot staff budget Adventure Park is a large...Ch. 22 - Housekeeping staff budget Ambassador Suites Inc....Ch. 22 - Ethics in Action The director of marketing for...Ch. 22 - Communication The city of Milton has an annual...Ch. 22 - Prob. 4TIFCh. 22 - Static budget for a service company A hank manager...Ch. 22 - Objectives of the master budget Dominos Pizza LLC...Ch. 22 - When compared to static budgets, flexible budgets:...Ch. 22 - Hannon Retailing Company prices its products by...Ch. 22 - Ming Company has budgeted sales at 6,300 units for...Ch. 22 - Krouse Company produces two products, forged...
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- A. Discuss the purpose of the cash budget. B. If the cash for the first quarter of the fiscal year indicates excess cash at the end of each of the first two months, how might the excess cash be used?arrow_forwardThe amount of prepaid expense reflected in the disbursement section of the cash budget is the same amount that is found on the monthly operating statement. True Falsearrow_forwardMarch Madness" refers to which of the following: O a. Financial year end O b. A period when financial statements by government departments are due A period when the budget is due d. The last month of the Financial year and all funds must be utilizedarrow_forward
- (a) The business needs to have a sense of its future cashflows and therefore requires thepreparation of the following: ▪ A schedule of budgeted cash collections for trade receivables (sales on account) for each of the months October to December. ▪ A schedule of expected cash disbursements for accounts payable (purchases on account) for each of the months October to December. ▪ A cash budget, with a total column, for the quarter ending December 31, 2021, showing the expected cash receipts and payments for each month and the ending cash balance for each of the three months, given that no financing activities took place.arrow_forward(a) The business needs to have a sense of its future cashflows and therefore requires thepreparation of the following:▪ A schedule of budgeted cash collections for trade receivables (sales on account) for each of the months October to December. ▪ A schedule of expected cash disbursements for accounts payable (purchases on account)for each of the months October to December.▪ A cash budget, with a total column, for the quarter ending December 31, 2021, showing the expected cash receipts and payments for each month and the ending cash balance for each of the three months, given that no financing activities took place.arrow_forwardWhy should an organization revise its budget for the fourth quarter?arrow_forward
- Using the same above information, what would it look like to complete the following? Schedule of cash payments for direct materials.Cash budget.Budgeted income statement for entire second quarter (not monthly).arrow_forwarda) The business needs to have a sense of its future cashflows and therefore requires the preparation of the following:▪ A schedule of budgeted cash collections for trade receivables (sales on account) for each of the months October to December. ▪ A schedule of expected cash disbursements for accounts payable (purchases on account)for each of the months October to December. ▪ A cash budget, with a total column, for the quarter ending December 31, 2021, showing the expected cash receipts and payments for each month and the ending cash balance for each of the three months, given that no financing activities took place.arrow_forwardRequired:(a) The business needs to have a sense of its future cash flows and therefore requires thepreparation of the following:▪ A schedule of budgeted cash collections for trade receivables (sales on account) for each ofthe months July to September. ▪ A schedule of expected cash disbursements for accounts payable (purchases on account)for each of the months July to September.▪ A cash budget, with a total column, for the quarter ending September 30, 2022, showing theexpected cash receipts and payments for each month and the ending cash balance for eachof the three months, given that no financing activities took place.arrow_forward
- B. Comment on the cash balance for August and September.C. Explain two (2) ways budgets are useful to managers.arrow_forwardFrancis and Company has planned a cash budget for the third quarter of 2004. The cash balance on July 1, 2004 is expected to be an overdraft of $s82,000. Extracts from the sales and purchases budgets are as follows: Budgeted Budgeted Month Sales Purchases May June July August September $800,000 $900,000 $750,000 $650,000 $800,000 $600,000 $550,000 $450,000 $500,000 All sales are on credit and an analysis of the records shows that debtors settle according to the following pattern, in accordance with the credit terms 5/30, i) n90: 50% in the month of sale 30% in the month following sale 20% the following month All purchases are on credit and past experience shows that 80% are settled in the month of purchase in order to take advantage of a 10% prompt settlement ii) discount. The balance will be disbursed in the month after purchase. The credit terms of the suppliers - 10/30, n60. iii) Wages and salaries are expected to be $1,800,000 per annum and are paid monthly. iv) Fixed operating…arrow_forwardRequired:(a) The business needs to have a sense of its future cash flows and therefore requires thepreparation of the following:▪ A schedule of budgeted cash collections for trade receivables (sales on account) for each ofthe months January to March. ▪ A schedule of expected cash disbursements for accounts payable (purchases on account)for each of the months January to March. ▪ A cash budget, with a total column, for the quarter ending March 31, 2022, showing theexpected cash receipts and payments for each month and the ending cash balance for eachof the three months, given that no financing activities took place.arrow_forward
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