MANAGERIAL ACCOUNTING ACCESS CARD
17th Edition
ISBN: 9781265348939
Author: Garrison
Publisher: MCG
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Textbook Question
Chapter 8, Problem 23P
PROBLEM 8—23 schedule or Expected cash collections;
The president of the retailer Prime Products has just approached the company’s bank with a request for a $30,000. 90-day loan. The purpose of the loan is to assist the company in acquiring inventories. Because the company has had some difficulty in paying off its loans in the past the loan officer has asked for a cash budget to help determine whether the loan should be made. The following data are available for the months April through June, during which the loan will be used:
a. On April 1, the start of the loan period, die cash balance will be $24,000.
b. Past experience shows that 30% of a mouth's sales are collected in the mouth of sale, 60% in the month following sale, and 8% in the second month following sale. The other 2% is
c. Merchandise purchases are paid in full during the month following purchase. Accounts payable for merchandise purchases during March, which will be paid in April, total $140,000.
d. In preparing the cash budget, assume that the $30,000 loan will he mode in April and repaid in June Interest on the loan will total $1,200.
Required:
- Calculate the expected cash collections for April, May, and Tune, and for the three months in total.
- Prepare a cash budget, by month and in total, for the three-month period.
- If the company needs a minimum cash balance of $20,000 to start each month, can the loan be repaid as planned? Explain.
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Problem 8-23 Schedule of Expected Cash Collections; Cash Budget [LO8-2, LO8-8]
The president of the retailer Prime Products has just approached the company’s bank with a request for a $51,000, 90-day loan. The purpose of the loan is to assist the company in acquiring inventories. Because the company has had some difficulty in paying off its loans in the past, the loan officer has asked for a cash budget to help determine whether the loan should be made. The following data are available for the months April through June, during which the loan will be used:
On April 1, the start of the loan period, the cash balance will be $24,400. Accounts receivable on April 1 will total $151,200, of which $129,600 will be collected during April and $17,280 will be collected during May. The remainder will be uncollectible.
Past experience shows that 30% of a month’s sales are collected in the month of sale, 60% in the month following sale, and 8% in the second month following sale. The other 2%…
Problem 7-17A (Algo) Preparing a sales budget and schedule of cash receipts LO 7-2
Thornton 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. Thornton expects sales in January year 1 to total $400,000 and to increase 20 percent per month in
February and March. All sales are on account. Thornton expects to collect 66 percent of accounts receivable in the month of sale, 24
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 Thornton 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…
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Chapter 8 Solutions
MANAGERIAL ACCOUNTING ACCESS CARD
Ch. 8 - Prob. 1QCh. 8 - Prob. 2QCh. 8 - Prob. 3QCh. 8 - 8-4 What is a master budget? Briefly describe its...Ch. 8 - 8—5 Why is the sales forecast the starting point...Ch. 8 - Prob. 6QCh. 8 - 8-7 Why is it a good idea to create a ‘"Budgeting...Ch. 8 - 8-8 What is a self-imposed budget? What are the...Ch. 8 - Prob. 9QCh. 8 - Prob. 10Q
Ch. 8 -
The Excel worksheet form that appears below is to...Ch. 8 - Prob. 2AECh. 8 - Prob. 1F15Ch. 8 - Prob. 2F15Ch. 8 - Prob. 3F15Ch. 8 - Prob. 4F15Ch. 8 - Morganton Company makes one product and it...Ch. 8 - Morganton Company makes one product and it...Ch. 8 - Morganton Company makes one product and it...Ch. 8 - Morganton Company makes one product and it...Ch. 8 - Morganton Company makes one product and it...Ch. 8 - Morganton Company makes one product and it...Ch. 8 - Prob. 11F15Ch. 8 - Prob. 12F15Ch. 8 - Prob. 13F15Ch. 8 - Prob. 14F15Ch. 8 - Prob. 15F15Ch. 8 - EXERCISE 8-1 Schedule of Expected Cash Collections...Ch. 8 - Prob. 2ECh. 8 - EXERCISE 8-3 Direct Materials Budget LOW Three...Ch. 8 - Prob. 4ECh. 8 -
EXERCISE 8-5 Manufacturing Overhead Budget...Ch. 8 -
...Ch. 8 -
The company's beginning cash balance for the...Ch. 8 - EXERCISE 8-8 Budgeted Income Statement LO8-9 Gig...Ch. 8 - EXERCISE 8-9 Budgeted Balance Sheet LO8-10 The...Ch. 8 -
EXERCISE 8-10 Production and Direct Materials...Ch. 8 - EXERCISE 8-11 Cash Budget Analysis LOB-8 A cash...Ch. 8 - Prob. 12ECh. 8 - Prob. 13ECh. 8 -
EXERCISE 8-14 Sales and Production Budgets LO8-2,...Ch. 8 - Prob. 15ECh. 8 - Prob. 16ECh. 8 - Prob. 17ECh. 8 - Prob. 18ECh. 8 - PROBLEM 8-19 Cash Budget: Income Statement:...Ch. 8 -
PROBLEM 8-20 Cash Budget; Income Statement;...Ch. 8 - Prob. 21PCh. 8 -
PROBLEM 8-22 Evaluating a Company’s Budget...Ch. 8 - PROBLEM 8—23 schedule or Expected cash...Ch. 8 - PROBLEM 8-24 Cash Budget with Supporting Schedules...Ch. 8 - PROBLEM B-25 Cash Budget with Supporting...Ch. 8 - PROBLEM 8-26 Behavioral Aspects of Budgeting:...Ch. 8 - (
$
55,000
$ 55, 000
...Ch. 8 -
PROBLEM 8-28 Cash Budget with Supporting...Ch. 8 - PROBLEM 8-29 Completing a Master Budget LO8-2,...Ch. 8 - PROBLEM 8-30 Integration of the Sales, Production,...Ch. 8 - Prob. 31PCh. 8 -
CASE 8-32 Evaluatinga Company’s Budget Procedures...Ch. 8 - CASE 8-33 Master Budget with Supporting Schedules...
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