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Use the information below to answer the two questions that follow. A company prepares its master budget for the second quarter on a monthly basis and has gathered the following budget data: April May $ 500,000 $ 660,000 $ June 860,000 1 Budgeted sales 2 Sales are made 70% for cash and 30% on credit. Credit sales are collected as follows: The month of sale 60% A month after sales 38% 2% Uncollectible (The company recognizes bad debt expenses in the month sales are made.) 3 Cost of goods sold for each month is 30% of sales. 4 Variable selling and administrative expenses (100% cash expenditure) are 20% of sales. 5 Fixed selling and administrative (S&A) expenses for each month are: $ 52,000 $ 19,000 Advertising Executive salaries Insurance Depreciation Total fixed S&A expenses 6 Inventory purchases paid for in May will be $15,000. 7 The company expects to borrow $20,000 on May 1. No principal will be repaid during the year; Interest at an annual rate of 12% is due monthly. 8 The company will declare and pay dividends of $25,000 in May. 10 How much is the budgeted net income for May? (Ignore taxes.) A $ 198,040 B S 202,000 C $ 201,800 D S 197,840 E None of the above. B$ с $ D $ 430,800 E None of the above. $ 29,000 $ 28,000 $ 128,000 11 If the beginning cash balance in May is expected to be $20,000, what will be the budgeted ending balance of cash in May? A $ 405,800 430,600 405,600

Use the information below to answer the two questions that follow. A company prepares its master budget for the second quarter on a monthly basis and has gathered the following budget data: April May $ 500,000 $ 660,000 $ June 860,000 1 Budgeted sales 2 Sales are made 70% for cash and 30% on credit. Credit sales are collected as follows: The month of sale 60% A month after sales 38% 2% Uncollectible (The company recognizes bad debt expenses in the month sales are made.) 3 Cost of goods sold for each month is 30% of sales. 4 Variable selling and administrative expenses (100% cash expenditure) are 20% of sales. 5 Fixed selling and administrative (S&A) expenses for each month are: $ 52,000 $ 19,000 Advertising Executive salaries Insurance Depreciation Total fixed S&A expenses 6 Inventory purchases paid for in May will be $15,000. 7 The company expects to borrow $20,000 on May 1. No principal will be repaid during the year; Interest at an annual rate of 12% is due monthly. 8 The company will declare and pay dividends of $25,000 in May. 10 How much is the budgeted net income for May? (Ignore taxes.) A $ 198,040 B S 202,000 C $ 201,800 D S 197,840 E None of the above. B$ с $ D $ 430,800 E None of the above. $ 29,000 $ 28,000 $ 128,000 11 If the beginning cash balance in May is expected to be $20,000, what will be the budgeted ending balance of cash in May? A $ 405,800 430,600 405,600

EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter4: Financial Planning And Forecasting
Section: Chapter Questions
Problem 4P
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Use the following information to answer the question number (11). 

Use the information below to answer the two questions that follow. A company prepares its master budget for the second quarter on a monthly basis and has gathered the following budget data: 1 Budgeted sales 2 Sales are made 70% for cash and 30% on credit. Credit sales are collected as follows: The month of sale 60% A month after sales 38% 2% Uncollectible (The company recognizes bad debt expenses in the month sales are made.) 3 Cost of goods sold for each month is 30% of sales. 4 Variable selling and administrative expenses (100% cash expenditure) are 20% of sales. 5 Fixed selling and administrative (S&A) expenses for each month are: $ 52,000 $ 19,000 $ 29,000 $ 28,000 $ 128,000 Advertising Executive salaries Insurance Depreciation Total fixed S&A expenses 6 Inventory purchases paid for in May will be $15,000. 7 BCDE The company expects to borrow $20,000 on May 1. No principal will be repaid during the year; Interest at an annual rate of 12% is due monthly. 8 The company will declare and pay dividends of $25,000 in May. 10 How much is the budgeted net income for May? (Ignore taxes.) 198,040 202,000 A $ 69 69 April May June $ 500,000 $ 660,000 $ 860,000 $ 201,800 $ 197,840 None of the above. C$ 11 If the beginning cash balance in May is expected to be $20,000, what will be the budgeted ending balance of cash in May? A $ 405,800 430,600 405,600 D $ 430,800 E None of the above. B $ C $
Transcribed Image Text:Use the information below to answer the two questions that follow. A company prepares its master budget for the second quarter on a monthly basis and has gathered the following budget data: 1 Budgeted sales 2 Sales are made 70% for cash and 30% on credit. Credit sales are collected as follows: The month of sale 60% A month after sales 38% 2% Uncollectible (The company recognizes bad debt expenses in the month sales are made.) 3 Cost of goods sold for each month is 30% of sales. 4 Variable selling and administrative expenses (100% cash expenditure) are 20% of sales. 5 Fixed selling and administrative (S&A) expenses for each month are: $ 52,000 $ 19,000 $ 29,000 $ 28,000 $ 128,000 Advertising Executive salaries Insurance Depreciation Total fixed S&A expenses 6 Inventory purchases paid for in May will be $15,000. 7 BCDE The company expects to borrow $20,000 on May 1. No principal will be repaid during the year; Interest at an annual rate of 12% is due monthly. 8 The company will declare and pay dividends of $25,000 in May. 10 How much is the budgeted net income for May? (Ignore taxes.) 198,040 202,000 A $ 69 69 April May June $ 500,000 $ 660,000 $ 860,000 $ 201,800 $ 197,840 None of the above. C$ 11 If the beginning cash balance in May is expected to be $20,000, what will be the budgeted ending balance of cash in May? A $ 405,800 430,600 405,600 D $ 430,800 E None of the above. B $ C $
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