Far East Inc., is a merchandising company that sells school supplies. The company is planning its cash needs for the third quarter. The following information has been assembled to assist in preparing a cash budget for the quarter: a. Budgeted monthly absorption costing income statements for July-October are as follows: July August September October Sales $36,000 $66,000 $64,000 $41,000 Cost of goods sold 21,000 _39,000 27,000 24,000 Gross margin 15,000 27,000 37,000 17,000 Selling and administrative expenses: Selling expense 6,300 10,500 8,600 8,100 Administrative expense" 3,300 6,300 6,700 6,100 Total selling and administrative expenses 9,600 16,800 15,300 14,200 Net operating income $ 5,400 $10,200 $21,700 $ 2,800 *Includes $1,500 depreciation each month. b. Sales are 20% for cash and 80% on credit. c. Credit sales are collected over a three-month period with 20% collected in the month of sale, 50% in the month following sale, and 30% in the second month following sale. May sales totaled $41,000, and June sales totaled $33,000. d. 50% of a month's inventory purchases are paid for in the month of purchase. The remaining 50% is paid in the following month. Accounts payable for inventory purchases at June 30 total $12,100. e. The company maintains its ending inventory levels at 65% of the cost of the goods sold in the following month. The merchandise inventory at June 30 is $13,650. f. Land costing $4,000 will be purchased in July. g. Dividends of $1,600 will be declared and paid in September. h. The cash balance on June 30 is $3,000; the company must maintain a cash balance of at least this amount at the end of each month. i. The company has an agreement with a local bank that allows it to borrow any amount at the beginning of each month, up to a total loan balance of $40,000. The interest rate on these loans is 1% per month, and for simplicity, we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter.

Garden Sales, Incorporated, sells garden supplies. Management is planning its cash needs for the second quarter. The company usually has to borrow money during this quarter to support peak sales of lawn care equipment, which occur during May. The following information has been assembled to assist in preparing a cash budget for the quarter:   Budgeted monthly absorption costing income statements for April–July are:     April May June July Sales $ 600,000 $ 900,000 $ 500,000 $ 400,000 Cost of goods sold 420,000 630,000 350,000 280,000 Gross margin 180,000 270,000 150,000 120,000 Selling and administrative expenses:         Selling expense 79,000 120,000 62,000 51,000 Administrative expense* 45,000 52,000 41,000 38,000 Total selling and administrative expenses 124,000 172,000 103,000 89,000 Net operating income $ 56,000 $ 98,000 $ 47,000 $ 31,000 *Includes $20,000 of depreciation each month.   Sales are 20% for cash and 80% on account. Sales on account are…

Milo Company manufactures beach umbrellas. The company is preparing detailed budgets for the third quarter and has assembled the following information to assist in the budget preparation: a. The Marketing Department has estimated sales as follows for the remander of the year (in units): July August Septemben 33,000 October 76,000 November 45,000 December 23,000 9,500 10,000 The selling price of the beach umbrellas is $15 per unit. b. All sales are on account. Based on past experience, sales are collected in the following pattern: 30% in the month of sale 65% in the month following sale 5% uncollectible Sales for June totaled $375,000. The company maintains finished goods inventories equal to 15% of the following month's sales. This requirement will be met at the end of June. Each beach umbrella requires 4 feet of Gilden, a material that is sometimes hard to acquire. Therefore, the company requires that the ending inventory of Gilden be equal to 50% of the following month's production…

Garden Sales, Incorporated, sells garden supplies. Management is planning its cash needs for the second quarter. The company usually has to borrow money during this quarter to support peak sales of lawn care equipment, which occur during May. The following information has been assembled to assist in preparing a cash budget for the quarter:   Budgeted monthly absorption costing income statements for April–July are:     April May June July Sales $ 650,000 $ 1,150,000 $ 610,000 $ 520,000 Cost of goods sold 455,000 805,000 427,000 364,000 Gross margin 195,000 345,000 183,000 156,000 Selling and administrative expenses:         Selling expense 121,000 110,000 72,000 52,000 Administrative expense* 50,500 68,800 44,600 49,000 Total selling and administrative expenses 171,500 178,800 116,600 101,000 Net operating income $ 23,500 $ 166,200 $ 66,400 $ 55,000 *Includes $33,000 of depreciation each month.   Sales are 20% for cash and 80% on account. Sales on account…

Garden Sales, Incorporated, sells garden supplies. Management is planning its cash needs for the second quarter. The company usually has to borrow money during this quarter to support peak sales of lawn care equipment, which occur during May. The following information has been assembled to assist in preparing a cash budget for the quarter:   Budgeted monthly absorption costing income statements for April–July are:     April May June July Sales $ 690,000 $ 860,000 $ 570,000 $ 470,000 Cost of goods sold 483,000 602,000 399,000 329,000 Gross margin 207,000 258,000 171,000 141,000 Selling and administrative expenses:         Selling expense 87,000 106,000 68,000 47,000 Administrative expense* 48,500 65,600 42,200 45,000 Total selling and administrative expenses 135,500 171,600 110,200 92,000 Net operating income $ 71,500 $ 86,400 $ 60,800 $ 49,000 *Includes $29,000 of depreciation each month.   Sales are 20% for cash and 80% on account. Sales on account are…

Milo Company manufactures beach umbrellas. The company is preparing detailed budgets for the third quarter and has assembled the following information to assist in the budget preparation:   The Marketing Department has estimated sales as follows for the remainder of the year (in units):   July 41,000 October 31,000 August 92,000 November 17,500 September 61,000 December 18,000   The selling price of the beach umbrellas is $13 per unit. All sales are on account. Based on past experience, sales are collected in the following pattern:   30% in the month of sale 65% in the month following sale 5% uncollectible   Sales for June totaled $533,000. The company maintains finished goods inventories equal to 15% of the following month’s sales. This requirement will be met at the end of June. Each beach umbrella requires 4 feet of Gilden, a material that is sometimes hard to acquire. Therefore, the company requires that the ending inventory of Gilden be equal to 50%…

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Rooney Company sells lamps and other lighting fixtures. The purchasing department manager prepared the following inventory purchases budget. Rooney's policy is to maintain an ending inventory balance equal to 10 percent of the following month's cost of goods sold. April's budgeted cost of goods sold is $77,000. Required a. Complete the inventory purchases budget by filling in the missing amounts. b. Determine the amount of cost of goods sold the company will report on its first quarter pro forma income statement. c. Determine the amount of ending inventory the company will report on its pro forma balance sheet at the end of the first quarter.

Milo Company manufactures beach umbrellas. The company is preparing detailed budgets for the third quarter and has assembled the following information to assist in the budget preparation:   A) The Marketing Department has estimated sales as follows for the remainder of the year (in units):   July 30,500 October 20,500 August 71,000 November 7,000 September 40,000 December 7,500 The selling price of the beach umbrellas is $10 per unit.   B) All sales are on account. Based on past experience, sales are collected in the following pattern:   30% in the month of sale 65% in the month following sale 5% uncollectible   Sales for June totaled $200,000. C) The company maintains finished goods inventories equal to 15% of the following month’s sales. This requirement will be met at the end of June. D) Each beach umbrella requires 4 feet of Gilden, a material that is sometimes hard to acquire. Therefore, the company requires that the ending inventory of Gilden be equal to 50%…