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Introduction: Budget means the estimation made for the usage of money to decide the amount that executor will need to execute the plan. The budgeting process refers to the process in which future business activity is planned for preparing the way of performing goals by mapping the formal plan.
Compute the expected cash collections for April, May, and June.
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Answer to Problem 8.27P
The expected cash collection for April is $104,000; May is $106,800; and June is $123,600.
Explanation of Solution
Particulars | April | May | June | Total |
Cash sales | $60,000 | $66,000 | $78,000 | $204,000 |
Credit sales: | ||||
March | $36,000 | $36,000 | ||
April | $8000 | $32,000 | $40,000 | |
May | $8,800 | $35,200 | $44,000 | |
June | $10,400 | $10,400 | ||
Total Cash Collections | $104,000 | $106,800 | $123,600 | $334,000 |
Working notes:
Cash sales are 60% of Total sales.
April:
May:
June:
Credit sales are equal to 40% of Total sales.
Month | Particulars | Amount |
March | $36,000 | |
April | Credit sales | $40,000 |
Received in April | 8,000 | |
Received in May | 32,000 | |
May | Credit sales | $44,000 |
Received in April | $8,800 | |
Received in May | $35,200 | |
June | Credit sales | $52,000 |
Received in April | $10,400 | |
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Introduction: Budget means the estimation made for the usage of money to decide the amount that executor will need to execute the plan. The budgeting process refers to the process in which future business activity is planned for preparing the way of performing goals by mapping the formal plan.
Compute the budgeted merchandise purchase for April, May, and June.
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Answer to Problem 8.27P
The budgeted merchandise purchase for April is $63,000; May is $72,000; and June is $81,000.
Explanation of Solution
Particulars | April | May | June | Total |
Cost of Goods Sold | $60,000 | $66,000 | $78,000 | $204,000 |
Add: Expected ending merchandise inventory | $43,000 | $49,000 | $52,000 | $114,000 |
Total requirement | $103,000 | $115,000 | $130,000 | $348,000 |
Less: Inventory at beginning | $40,000 | $43,000 | $49,000 | $132,000 |
Required Purchase | $63,000 | $72,000 | $81,000 | $216,00 |
Working notes:
- Cost of goods sold:
- Inventory at beginning:
April:
May:
June:
April- Inventory balance at end of March - $40,000
May- Inventory balance at end of April - $43,000
June- Inventory balance at end of May - $49,000
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Introduction: Budget means the estimation made for the usage of money to decide the amount that executor will need to execute the plan. The budgeting process refers to the process in which future business activity is planned for preparing the way of performing goals by mapping the formal plan.
Compute the expected cash disbursements for merchandise purchases for April, May, and June.
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Answer to Problem 8.27P
The expected cash disbursement for merchandise purchases for April is $57,600: May $63,900; and June is $72,800.
Explanation of Solution
Particulars | April | May | June | Total |
Cash Purchase | $6,300 | $7,200 | $8,180 | $21,600 |
Credit Purchase | $51,300 | $56,700 | $64,800 | $172,800 |
Total Cash Disbursements | $57,600 | $63,900 | $72,800 | $194,400 |
Working notes:
- Cash purchase: 10% of merchandise inventory purchases. Cash purchases would be 10% of required purchases.
- 90% of purchases are credit purchase in the month subsequent to the purchase.
April:
May:
June:
Month | Particulars | Amount |
March | Accounts payable | $51,300 |
April | 90% of required April Purchases | $56,700 |
May | 90% of required May purchases | $64,800 |
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Introduction: Budget means the estimation made for the usage of money to decide the amount that executor will need to execute the plan. The budgeting process refers to the process in which future business activity is planned for preparing the way of performing goals by mapping the formal plan.
Prepare a budgeted
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Answer to Problem 8.27P
Budgeted balance sheet shows assets and liability of $334,600
Explanation of Solution
Particulars | Amount |
Assets: | |
Cash | $144,000 |
Accounts Receivable | $41,600 |
Inventory | $52,000 |
Building | $97,000 |
Total Assets | $334,600 |
Liabilities and Equity Shareholders: | |
Accounts Payable | $72,900 |
Common stock | $70,000 |
$191,700 | |
Total Liabilities | $334,600 |
Working notes:
- Cash
- Accounts receivable
- Inventory
- Building
- Accounts payable
- Retained earnings
Particulars | Amount |
Opening balance | $55,000 |
Add: Total Cash Collections | $334,400 |
Less: Selling and Administrative expenses | ($51,000) |
Cash Ending balance | $144,000 |
Particulars | Amount |
Cost | $100,000 |
Less: | ($3,000) |
Net Value | $97,000 |
Particulars | Amount |
Total Purchase for June | $81,000 |
Less: Cash Purchase | ($8,100) |
Accounts Payable | $72,900 |
Particulars | Amount |
Beginning Balance | $109,700 |
Add: Income for April | 25,000 |
Income for May | 27,500 |
Income for June | 32,500 |
Less: Depreciation for April | 1,000 |
Depreciation for May | 1,000 |
Depreciation for June | 1,000 |
Ending Balance | $191,700 |
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Chapter 8 Solutions
MGMR ACCT F/MANAGERS-CONNECT 180-DAY COD
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