
Concept explainers
Prepare a

Answer to Problem 3BP
Company B | ||
Cash Budget | ||
For the Month Ended November 30 | ||
Particulars | $ | $ |
Cash balance at beginning of month | 37,200 | |
Add: Receipts | ||
Collections on receivables ( refer Schedule A – Table 2) | 820,000 | |
Sale of fully depreciated equipment | 9,000 | 829,000 |
Total cash available | 866,200 | |
Less: Payments | ||
Payments for purchases of merchandise (refer Schedule B – Table 3) | 477,000 | |
Payments on operating expenses (10) | 185,000 | |
Payment on note payable | 102,250 | 764,250 |
Cash balance at end of month | 101,950 |
Table (1)
Therefore, the cash balance at the end of the November is $101,950.
Explanation of Solution
Budget:
Budget is an effective tool to achieve the financial and operational goals of the business. Budget is the key element of the financial planning and it assists managers to control the business cost. Management should set the budgeted amount at reasonable and achievable levels.
Prepare the schedule of cash collections on accounts receivable, and cash payments for purchases of merchandise as follows:
Schedule A:
Schedule A—Collections on Receivables in November | $ |
September sales (1) | 15,000 |
October sales (2) | 175,000 |
November sales (3) | 630,000 |
Total collections on receivables | 820,00 |
Table (2)
Schedule B:
Schedule B—Payments for Purchases of Merchandise | $ |
On October purchases (8) | 217,000 |
On November purchases (9) | 269,500 |
Total payments for purchases of merchandise | 486,500 |
Table (3)
Working note:
Calculate the cash received from the September sales
Calculate the cash received from the October sales
Calculate the cash received from the November sales
Calculate the inventory (units) at the end of the September
Calculate the inventory (units) at the end of the October
Calculate the inventory (units) at the end of the November
Calculate the number of units purchased and cost of purchase for the each months
Particulars |
Units (A) |
Cost of per unit (B) |
Purchases |
Inventory at end of September (4) | 9,000 | ||
Add: Purchases in October | 72,000 | $7 | $432,000 |
Available for sale in October | 81,000 | ||
Less: Sales in October | 70,000 | ||
Inventory at end of October | 11,000 | ||
Add: Purchases in November | 87,000 | $7 | $522,000 |
Available for sale in November | 98,000 | ||
Less: Sales in November (estimated) | 90,000 | ||
Inventory at end of November | 8,000 |
Table (4)
(7)
Calculate the cash paid for the merchandise purchase for the month October
Calculate the cash paid for the merchandise purchase for the month November
Calculate the operating expense under cash budget
Want to see more full solutions like this?
Chapter 23 Solutions
Financial & Managerial Accounting
- Calculate gelexy corp estimated free cash flow?arrow_forwardGeneral accounting questionarrow_forwardi am also posting you can answer my question also you answered my question can i give unhelpful?? You are posting questions and giving unhelpful i am also positing you can give my answer i will not give unhelpful but If you unhelpful my answer then I will unhelpful your answer. Also you know unhelpful will remove after coureshero review. So coperate.arrow_forward
- What is the direct materials price variance? Accounting questionarrow_forwardI am searching for the correct answer to this general accounting problem with proper accounting rules.arrow_forwardYou are posting questions and giving unhelpful i am also positing you can give my answer i will not give unhelpful but If you unhelpful my answer then I will unhelpful your answer. Also you know unhelpful will remove after coureshero review. So coperate.arrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education





