20) EZ Financing Inc. has prepared the operating budget for the first quarter of
ID: 2415343 • Letter: 2
Question
20) EZ Financing Inc. has prepared the operating budget for the first quarter of 2015. They forecast sales of $50,000 in January, $60,000 in February, and $70,000 in March. Variable and fixed expenses are as follows:
Variable: Power cost (40% of Sales)
Miscellaneous expenses: (5% of Sales)
Fixed: Salary expense: $8,000 per month
Rent expense: $5,000 per month
Depreciation expense: $1,200 per month
Power cost/fixed portion: $800 per month
Miscellaneous expenses/fixed portion: $1,000 per month
Calculate total selling and administrative expenses for the month of January.
A) $38,500
B) $47,500
C) $41,700
D) $43,000
Note: Supporting computations are required for this problem. Failure to do so will result in loss of points.
21) Mumbai Inc. has prepared the following purchases budget:
Month
Budgeted Purchases
June
$67,000
July
72,500
August
76,300
September
73,700
October
69,200
All purchases are paid for as follows: 10% in the month of purchase, 50% in the following month, and 40% two months after purchase. Calculate total cash payments made in October for purchases.
A) $72,630
B) $70,680
C) $70,520
D) $74,290
Note: Supporting computations are required for this problem. Failure to do so will result in loss of points.
22 Mumbai Inc. has prepared the following purchases budget:
Month
Budgeted Purchases
June
$67,000
July
72,500
August
76,300
September
73,700
October
69,200
All purchases are paid for as follows: 10% in the month of purchase, 50% in the following month, and 40% two months after purchase. Calculate balance of Accounts payable at the end of October.
A) $77,680
B) $91,760
C) $69,330
D) $74,290
Note: Supporting computations are required for this problem. Failure to do so will result in loss of points.
23) Jackson Corp. has provided a part of its budget for the 2nd quarter:
Apr
May
June
Cash collections
$40,000
$45,000
$52,000
Cash payments:
Purchases of inventory
4,500
7,200
4,500
Operating expenses
7,900
5,600
9,000
Capital expenditures
0
20,000
4,600
The cash balance on April 1 is $12,000. Assume that there will be no financing transactions or costs during the quarter. Calculate the cash balance at the end of April.
A) $50,000
B) $40,200
C) $39,600
D) $51,800
24) Baltimore Enterprises has budgeted sales for the months of September and October at $300,000 and $280,000, respectively. Monthly sales are 80% credit and 20% cash. Of the credit sales, 50% are collected in the month of sale and 50% are collected in the following month. Calculate cash collections for the month of October.
A) $168,000
B) $232,000
C) $288,000
D) $290,000
Note: Supporting computations are required for this problem. Failure to do so will result in loss of points.
Month
Budgeted Purchases
June
$67,000
July
72,500
August
76,300
September
73,700
October
69,200
Explanation / Answer
1) Selling and administrative expense for the month of Jan
2)Cash payment made in October
23) Cash balance $12,000
Add:Cash collections 40,000
total cash 52,000
less:Purchase of inventory (4,500)
operating expense (7,900)
Balance $39,600
Power cost (50,000@40%) $20,000 Miscellaneuos expense (50,000@5%) 2,500 Salary expense 8,000 Rent expense 5,000 Depreciation expense 1,200 Power 800 Miscellaeous expense 1,000 total 38,500Related Questions
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