Delhi, Inc., seeks your assistance in developing cash and other budget informati
ID: 2465143 • Letter: D
Question
Delhi, Inc., seeks your assistance in developing cash and other budget information for August, September, and October. At July 31, the company had cash of $12,000, accounts receivable of $889,000, inventories of $733,200, and accounts payable of $191,979. The budget is to be based on the following assumptions.
Each month’s sales are billed on the last day of the month.
Customers are allowed a 3 percent discount if payment is made within 10 days after the billing date. Receivables are recorded in the accounts at their gross amounts (not net of discounts).
The billings are collected as follows: 60 percent within the discount period, 25 percent by the end of the month, and 9 percent by the end of the following month. Six percent is uncollectible.
Purchase data are as follows.
Of all purchases of merchandise and selling, general, and administrative expenses, 55 percent is paid in the month purchased and the remainder in the following month.
The number of units in each month’s ending inventory equals 130 percent of the next month’s units of sales.
The cost of each unit of inventory is $12.
Selling, general, and administrative expenses, of which $4,000 is depreciation, equal 15 percent of the current month’s sales.
Actual and projected sales follow:
Delhi, Inc., seeks your assistance in developing cash and other budget information for August, September, and October. At July 31, the company had cash of $12,000, accounts receivable of $889,000, inventories of $733,200, and accounts payable of $191,979. The budget is to be based on the following assumptions.
Explanation / Answer
Answer:1
Production = sales + Ending inventory - beginning inventory
=47000+(45300*1.30) - (47000*1.30)
= 47000 + 58890- 61100 = 44790
Purchases= Production * cost per unit
= 44790 * $12 = $537480
Answer: 2
Production = sales + Ending inventory - beginning inventory
=45300+(48300*1.30) - (45300*1.30)
= 45300 + 62790 - 58890 = 49200
Purchases= Production * cost per unit
= 49200 * $12 = $590400
Answer:3
Discount period (july paid in august) = 816000*60% = 489600
Amount with discount = [489600 - (489600*3%)] = 474912
End of month (july paid in august) = 816000*25% = 204000
End of next month (june paid in august) = 814300*9% =73287
Total collectible for august = $752199
Answer:4
Merchandise payment for august purchases = 537480*0.45 = 241866
Selling, general and administrative expenses for august = (799000*0.15) - 4000 of dep. = 115850
Payment made for Selling, general and administrative expenses for august = 115850*0.45 = 52132.5
Merchandise payment for september purchases = 590400*0.55 = 324720
Selling, general and administrative expenses for september = (770,100*0.15) - 4000 of dep. = 111515
Payment made for Selling, general and administrative expenses for september = 111515*0.55 = 61333.25
Total budgeted cash disbursement in september = 241866+52132.5+324720+61333.25 = $680051.75
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.