FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Transcribed Image Text:Prepare a budget for cash collections from sales for each of the four quarters.
Transcribed Image Text:Problem #7: Operating Budgets
Marker Products, Inc. sells all of its products on credit. The company expects to collect 65%of sales in the quarter of sale and
35% the quarter following the sale. Accounts receivable at the end of last year totaled $3,000,000, all of which will be collected
in the first quarter of the coming year. Marker's sales budget shows the following projected sales revenues:
Quarter 1:
Quarter 2:
Quarter 3:
Quarter 4:
$8,800,000
$11,000,000
$11,440,000
$10,560,000
Required:
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- Parker corp which operates on a calendar year, expects to sell 6000 units in october and expects sales to increase 10% each month there after. Sales price is expected to stay constant at 17 per unit. what are budgeted revenues for the fourth quarter?102,000 306,000336,600337,620arrow_forwardVertical Ladder Company (VLC) forecasts its sales for January through April will be $60,000, $70,000, $100,000, and $90,000, respectively. All sales are made on credit, and it is expected that 20 percent of sales will be collected in the month of the sale and the remainder will be collected the month following the sale. Customers who pay in the month of the sale will take the 4 percent cash discount VLC offers for paying early. VLC normally purchases and pays for raw materials, which cost 60 percent of sales, one month prior to selling the finished products. Employees' wages represent 30 percent of sales and rent is $4,000 per month. At the beginning of February, VLC expects to have $6,000 in cash, which is $2,000 greater than its target cash balance. Using the information provided, construct VLC's cash budget for February and March. Round your answers to the nearest dollar. Use a minus sign to enter a negative value, if any. If your answer is zero, enter "0". February March…arrow_forwardThe beginning cash balance is $20,600. Sales are forecasted at $715,000 of which 70% will be on account. The remainder are cash sales. Sixty percent of credit sales are expected to be collected in the year of sale. Cash expenditures for the year are forecasted at $465,000. Accounts receivable from previous accounting periods totaling $11,000 will be collected in the current year. The company is required to make a $21,500 loan payment and an annual interest payment on the last day of the year. The loan balance as of the beginning of the year is $145,000, and the annual interest rate is 10%. What will be reported as 'cash' on the budgeted balance sheet?arrow_forward
- Navigator sells GPS trackers for $41 each. It expects sales of 4,900 units in quarter 1 and a 5% increase each subsequent quarter for the next 8 quarters. Prepare a sales budget by quarter for the first year. Round final answers to nearest whole dollar. Navigator Sales Budget For the Year Ending Dec. 31, 20XX Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total Expected Sales (Units) Sales Price per Unit Total Sales Revenue $arrow_forwardVertical Ladder Company (VLC) forecasts its sales for January through April will be $40,000, $60,000, $100,000, and $90,000, respectively. All sales are made on credit, and it is expected that 40 percent of sales will be collected in the month of the sale and the remainder will be collected the month following the sale. Customers who pay in the month of the sale will take the 2 percent cash discount VLC offers for paying early. VLC normally purchases and pays for raw materials, which cost 45 percent of sales, one month prior to selling the finished products. Employees' wages represent 20 percent of sales and rent is $6,000 per month. At the beginning of February, VLC expects to have $4,000 in cash, which is $1,000 greater than its target cash balance. Using the information provided, construct VLC's cash budget for February and March. Round your answers to the nearest dollar. Use a minus sign to enter a negative value, if any. If your answer is zero, enter "0". February March…arrow_forwardValley's managers have made the following additional assumptions and estimates: Estimated sales for July and August are $345,000 and $315,000 respectively Each month's sales are 20% cash sales and 80% credit sales. Each month's credit sales are collected 30% in the month of the sale and 70% in the month following the sale. All of the accounts receivable at June 30 will be collected in July Each month's ending inventory must equal 20% of the cost of the next month's sales. The Cost of Goods Sold is 60% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts payable at June 30 will be paid in July Monthly selling and administrative expenses are always $75,000. Each month $10,000 of this total amount is depreciation expense and the remaining $65,000 relates to expenses that are paid in the month they are incurred The company does not plan to buy or…arrow_forward
- Develop a cash budget for the next three months using the information provided below. Monthly sales forecasts are $150,000, $180,000, and $60,000 (June, July, August) The current month's sales are $120,000 (May) Cost of goods sold equals 65% of sales Lease payment= 22,000 per month The company is required to pay an installment of $120,000 for a note (debt) The cash position at the end of the current month is $80,000 The target cash balance is $50,000 Assume that 60% of sales are collected in the month sold and the remaining collected in the following month.arrow_forwardKayak Company budgeted the following cash receipts (excluding cash receipts from loans received) and cash payments (excluding cash payments for loan principal and interest payments) for the first three months of next year. January February March Cash Receipts Cash payments $ 519,000 $ 468,000 404,000 452,000 353,000 521,000 Kayak requires a minimum cash balance of $40,000 at each month end. Loans taken to meet this requirement charge 1%, interest per month, paid at each month-end. The interest is computed based on the beginning balance of the loan for the month. Any preliminary cash balance above $40,000 is used to repay loans at month-end. The company has a cash balance of $40,000 and a loan balance of $80,000 at January 1 Prepare monthly cash budgets for January, February, and March. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign.)arrow_forwardValley's managers have made the following additional assumptions and estimates: Estimated sales for July and August are $345,000 and $315,000 respectively Each month's sales are 20% cash sales and 80% credit sales. Each month's credit sales are collected 30% in the month of the sale and 70% in the month following the sale. All of the accounts receivable at June 30 will be collected in July Each month's ending inventory must equal 20% of the cost of the next month's sales. The Cost of Goods Sold is 60% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts payable at June 30 will be paid in July Monthly selling and administrative expenses are always $75,000. Each month $10,000 of this total amount is depreciation expense and the remaining $65,000 relates to expenses that are paid in the month they are incurred The company does not plan to buy or sell any plant and…arrow_forward
- Assume that sales and expenses forecasts for months April, May, June, and July are as follows. month, 60% are paid in the next month, and 20% are paid in the second month after. All expenses in a month are paid in the same month. There is a $20,000,000 minimum required cash balance at the end of each month, and any shortage from this minimum requirement will be covered by obtaining a loan. Any excess over $20,000,000 will be used to reduce or pay off cumulative loan. Initial cash balance in June is $6,000,000 and there is no cumulative loan at this time. Monthly prorated tax rate is 2%, and monthly interest rate on cumulative loan is 1%. Requirements: Prepare cash budget proforma for months June and July and interpret the result in detail.arrow_forwardSunland Company estimates its sales at 180000 units in the first quarter and that sales will increase by 17000 units each quarter over the year. They have, and desire, a 25% ending inventory of finished goods. Each unit sells for $25. 40% of the sales are for cash. 70% of the credit customers pay within the quarter. The remainder is received in the quarter following sale. Cash collections for the third quarter are budgeted at O $5273500. O $3026500. O $4387000. O $6057389.arrow_forwardLeaning Tower of Pizza, Inc. is preparing its master budget for its first quarter of business. It expects to sell 8,000 pizzas at $7 per pizza per month. It expects to collect 90% of the sales in the month of the sale and 10% in the following month. Calculate its accounts receivable balance at the end of its first quarter.arrow_forward
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