A CPA firm’s budgeted cash collection for the first six months of the year looks

Question

A CPA firm’s budgeted cash collection for the first six months of the year looks like the following: Cash Sales Credit Sales January……. $75,000 $210,000 February…... $85,000 $227,000 March……... $63,000 $215,000 April……….. $92,000 $199,000 May…….….. $68,000 $456,000 June………… $71,000 $273,000 Managers expect that collection on credit will follow the following pattern: 50% in month of sale 30% in month following sale 20% in second month following sale 3. If January 1st account receivable balance was $110,000 ($80,000 from December’s credit sales, and $30,000 of November’s credit sales), what is the total cash collection for January? 4. What would be the CPA firm’s account receivable balance on May 30th? Takeya Company’s 2014 sales are forecasted to be: Quarter 1st 2nd 3rd 4th Unit Sales 16,000 18,000 20,000 17,000 In order to produce one unit, the company must use two and a half pounds of raw material. Moreover, each quarter’s ending raw materials balance must equal 40% of the following quarter’s production needs. Additionally, at the end of each quarter Takeya is determined to hold finished goods inventory of 20% of the next quarter’s sales needs. What is the second quarter budgeted raw material purchases? he following sales data pertains to the Extron Company: October November December Budgeted sales $140,000 $160,000 $180,000 25% of sales are for cash and the collection schedule for credit sales follows this pattern: 50% during month sale 35% during the first following month 10% during the second following month 5% uncollectable Extron requires a minimum ending cash balance of $9,500. Moreover the company predicts a beginning balance of $12,000 for December. Other December data includes: Purchases paid at December……………………..……….…$79,500 Selling and Administrative expenses paid at December…… $59,500 Cash dividend paid at December…………………………… $45,000 Depreciation expenses for December……………………… $17,000 7. Dell Corporation produces and sells a computer monitor model x. Dell’s budgeted data for March is: a. Cash sales of $1,232,000 b. March 1st cash balance of $17,500 c. March cash disbursements (not including interest) $1,245,652 d. Required minimum cash balance on the end of March is $16,000 e. 2% Interest is paid in the end of the month when the company borrows in the beginning of the month. When needed, Dell can borrow cash from Bank of America. How many dollars does Dell must borrow in March? The data bellow regards The Bag House, a store that sells bags. Budgeted sales (credit): for January, February, and March are $420,000, $310,000 and $280,000. Budgeted collections: 60% in month of sale, 30% in following month, and 10% uncollectable. Cost of goods sold: 50% of sales. Purchases of merchandize: 30% in month prior to sale, and 70% in month of sale. Payment for purchases: 80% in month of purchase and 20% in following month. Selling and administrative costs: $32,500 paid in cash monthly. Depreciation of office equipment: $21,500 monthly. 8. What is February’s net income (loss) before interest and taxes? 9. What is the total cash disbursement for purchases of merchandize in February? 10. What is the change in the cash account for February? The following data pertains to the budget reports of Jawbone, a company specializing in wearable technology. Jan Feb March April May June Sales $305,000 $330,000 $290,000 $365,000 $315,000 $285,000 Purchases $150,000 $181,000 $270,000 $205,000 $185,000 $140,000 Additional information: • Purchases are paid 50% in month of purchase and 50% in the following month • COGS are 60% of sales • Sales collections are collected 70% in month of sale and 30% in the following month • Selling and Administrative costs are 15% of sales each month (paid in cash monthly) • Interest payments are paid in February and July and the monthly interest is $1000 • Jawbone is planning to declare cash dividends in April to be paid in May: $41,000 • The balance in Retained Earnings is expected to be on March 31: $18,500 • The cash balance as of April 1 is expected to be $28,000 11. What is the amount of cash Jawbone is collecting in April? What are Jawbone’s cash disbursements for April? 13. What is the expected balance in Retained Earnings in the end of April?

Explanation / Answer

Collection of credit sales

50% in month of sale

30% in next month

20% in second month of sale

Ans. 3 - Total Cash Collection of january

Total = $258000

Ans.4

Account recievable balance on 30th may

balance from april month - $199000*20% = $39800

balance from may month - $456000*50% = $228000

Total = $267800

Ans. 5

Sales(budgeted)

(a)

Raw Mat. Requireemnt

(b) = (a) * 2.5 pounds

Closing Balance

Finished goods stock requirement

SOLUTION.

Raw material requirement for 2nd qtr budgeted sales = 45000

Add. Closind balance requirement - 50000 * 40% = 20000

Total = 65000 pounds

Ans. 6 Extron Company cash budget for December month

Opening Balance - 12000

Add. cash sales of december month - 180000*25% = 45000

Add. credit sales collection of october month - (140000*75%)*10% = 10500

Add. credit sales collection of november month - (160000*75%)*35% = 42000

Add. credit sales collection of december month - (180000*75%)*50% = 67500

Total = 17000

Less Purchases made durind december = 79500

Less selling and admin. expenses = 59500

Less Dividend = 45000

Closing balance = (7000)

Desired min. closing balance = 9500

cash shortage = 16500

Month Cash sales($) Credit sales(&) Jan 75000 210000 Feb 85000 227000 march 63000 215000 April 92000 199000 May 68000 456000 June 71000 273000

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