1. Describe at least five benefits of budgeting. (1 point) 2. Wally-Mart has bud
ID: 2519661 • Letter: 1
Question
1. Describe at least five benefits of budgeting. (1 point)
2. Wally-Mart has budgeted cost of goods sold for March of $50,000 for its men's shorts. Management wants to have $12,000 of shorts in inventory at the end of the month to prepare for the summer season. Beginning inventory in March was $7,000. What dollar amount of shorts should be purchased to meet the above plans? You must show your work to receive credit. (1 point).
3. San Pedro Co is preparing a cash budget for March. The company has $30,000 cash at the beginning of March and anticipates $70,000 in cash receipts and $93,000 in cash disbursements during March. San Pedro has an agreement with its bank to maintain a cash balance of $10,000. What amount, if any, must the company borrow during March to maintain a $10,000 cash balance?
Explanation / Answer
1.
Budgeting is important because it helps you maintain a balance between your earning and spending. It puts you on the path toward achieving financial goals while building good credit and avoiding debt.
2.
Shorts to be purchased = cost of goods to be sold + closing value of shorts - openning value of shorts
= 50,000 + 12,000 - 7,000
= 55,000
3.
Amount to be borrowed = Closing Cash balance - opening cash balance - cash receipts + cash disbursements
= 10,000 - 30,000 - 70,000 + 93,000
= $ 3,000
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