COST ACCOUNTING
16th Edition
ISBN: 9781323169261
Author: Horngren
Publisher: PEARSON C
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Textbook Question
Chapter 6, Problem 6.45P
Refer to the information in Problem 6-44.
All purchases made in a given month are paid for in the following month, and direct material purchases make up all of the accounts payable balance and are reflected in the accounts payable balances at the beginning and the end of the year.
Sales are made to customers with terms net 45 days. Fifty percent of a month’s sales are collected in the month of the sale, 25% are collected in the month following the sale, and 25% are collected two months after the sale and are reflected in the accounts receivables balances at the beginning and the end of the year. Direct manufacturing labor, variable manufacturing
Selected balances for December 31, 2017, follow:
| Cash | $29,200 |
| Accounts payable | 21,450 |
| 40,000 |
Selected budget information for December 2018 follows:
| Accounts payable | $27,770 |
| Accounts receivable | 48,500 |
Hazlett has budgeted to purchase equipment costing $145,000 for cash during 2018. Hazlett desires a minimum cash balance of $25,000. The company has a line of credit from which it may borrow in increments of $1,000 at an interest rate of 12% per year. By special arrangement, with the bank, Hazlett pays interest when repaying the principal, which only needs to be repaid in 2019.
- 1. Prepare a cash budget for 2018. If Hazlett must borrow cash to meet its desired ending cash balance, show the amount that must be borrowed.
- 2. Does the cash budget for 2018 give Hazlett’s managers all of the information necessary to manage cash in 2018? How might that be improved?
- 3. What insight does the cash budget give to Hazlett’s managers that the
budgeted income statement does not?
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From the attached photo answer the following:
1. What is the sales collection schedule for the six (6) months showing the accounts receivable at the end of the six months ending June 2021.2.What is he purchase payment schedule for the six (6) months showing discounts received and accounts payable at the end of the six months ending June 2021.3. What is the cash budget including a total column for the three (3) months ending June 2021 (April to June 2021).
Rivers Company purchases merchandise on account. In general, Rivers pays 50 percent in the month of purchase and 50 percent in the
following month. All payments in the month of purchase qualify for a 2 percent cash discount. First quarter budgeted purchases are:
January
February
March
$90,000
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96,000
A. What are the total cash disbursements expected in February?
$
B. What are the total cash disbursements expected in March?
C. Now suppose that there is no cash discount for purchases made in the month of purchase. What are the total cash disbursements
expected in February and in March?
February cash disbursements
March cash disbursements
Required:
1.Prepare a cash receipts budget schedule for each of the first three months (July – September), including the total receipts per month
2.Prepare a material purchases budget schedule for each of the first three months (July – September), including the total purchases per month
3.Prepare a cash budget for the month of July. Include the owners’ cash contributions
Chapter 6 Solutions
COST ACCOUNTING
Ch. 6 - What are the four elements of the budgeting cycle?Ch. 6 - Define master budget.Ch. 6 - Strategy, plans, and budgets are unrelated to ore...Ch. 6 - Budgeted performance is a better criterion than...Ch. 6 - Production managers and marketing managers are...Ch. 6 - Budgets meet the cost-benefit test. They force...Ch. 6 - Define rolling budget. Give an example.Ch. 6 - Outline the steps in preparing an operating...Ch. 6 - The sales forecast is the cornerstone for...Ch. 6 - Prob. 6.10Q
Ch. 6 - Define Kaizen budgeting.Ch. 6 - Prob. 6.12QCh. 6 - Explain how the choice of the type of...Ch. 6 - What are some additional considerations that arise...Ch. 6 - Prob. 6.15QCh. 6 - Master budget. Which of the following statements...Ch. 6 - Operating and financial budgets. Which of the...Ch. 6 - Production budget. Superior Industries sales...Ch. 6 - Responsibility centers. Elmhurst Corporation is...Ch. 6 - Cash budget. Mary Jacobs, the controller of the...Ch. 6 - Sales budget, service setting. In 2017 Hart Sons,...Ch. 6 - Sales and production budget. The Coby Company...Ch. 6 - Direct material budget. Dawson Co. produces wine....Ch. 6 - Material purchases budget. The McGrath Company has...Ch. 6 - Revenues, production, and purchases budgets. The...Ch. 6 - Revenues and production budget. Saphire, Inc.,...Ch. 6 - Budgeting; direct material usage, manufacturing...Ch. 6 - Budgeting, service company. Ever Clean Company...Ch. 6 - Budgets for production and direct manufacturing...Ch. 6 - Activity-based budgeting. The Jerico store of...Ch. 6 - Kaizen approach to activity-based budgeting...Ch. 6 - Responsibility and controllability. Consider each...Ch. 6 - Responsibility, controllability, and stretch...Ch. 6 - Cash flow analysis, sensitivity analysis....Ch. 6 - Budget schedules for a manufacturer. Hale...Ch. 6 - Budgeted costs, Kaizen improvements environmental...Ch. 6 - Revenue and production budgets. (CPA, adapted) The...Ch. 6 - Budgeted income statement. (CMA, adapted) Smart...Ch. 6 - Prob. 6.39PCh. 6 - Comprehensive problem with ABC costing. Animal...Ch. 6 - Cash budget (continuation of 6-40). Refer to the...Ch. 6 - Comprehensive operating budget. Skulas, Inc.,...Ch. 6 - Cash budgeting, budgeted balance sheet....Ch. 6 - Comprehensive problem; ABC manufacturing, two...Ch. 6 - Cash budget. (Continuation of 6-44) (Appendix)...Ch. 6 - Budgeting and ethics. Jayzee Company manufactures...Ch. 6 - Kaizen budgeting for carbon emissions. Apex...Ch. 6 - Comprehensive budgeting problem; activity-based...
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