Nestee controller for Mactan Relaters has assembled the following data to assist in the preparation of a cash budget for the third quarter of 2021: Sales- May $100,000 ;June $120,000; July $90,000 ; August $100,000 September $135,000; October $110,000 Each month, 30% of sales are for cash and 70% ore on credit. The collection pattern for credit sales is 20% in the month of sale, 50% in the following month, and 30% in the second month following the sale. Each month the ending inventory exactly equals 50% of the cost of next month's sales. The markup on goods is 25% of cost. Inventory purchases are paid in the month following the purchase. Monthly expenses are as follows: Salaries and wages $10,000; Depreciation $4,000; Utlites $1,000; Other $1,700. Property taxes of $15,000 are due and payable on July 15,2021. Advertising fees of $6,000 must be paid on August 20,2021. A lease on a new storage facility is scheduled to begin on September 2, 2021.Monthly payments are $5,000. The company has a policy to maintain a minimum cash balance of $10,000. If necessary , it will borrow to meet its short term needs. All borrowing is done at the end of the month. All payments on principal and interest are made at the end of a month. The annual interest rate is 9%. The company must borrow in multiples of $1,000. The balance sheet as of June 30, 2021 is as follows: Cash $ 13,550 Accounts Receivable 88,200 Inventory 36,000 Plant and Equipment, net 425,000 Accounts Payable $ 84,000 Ordinary Share Capital 210,000 Retained Earnings 268,750 4.) How much is the cost of goods sold for the 3rd quarter a. $356,000 b. $260,000 c. $248,000 d. $348,000 5.) What is the budgeted purchases for the 3 quarter? a. $268,000 b. $130,000 c. $174,000 d. $250,000 6.) What is the total cash disbursements for inventory in the 3rd quarter? a. $254,000 b. $352,000 c. $268,000 d. $250,000
Nestee controller for Mactan Relaters has assembled the following data to assist in the preparation of a cash budget for the third quarter of 2021: Sales- May $100,000 ;June $120,000; July $90,000 ; August $100,000 September $135,000; October $110,000 Each month, 30% of sales are for cash and 70% ore on credit. The collection pattern for credit sales is 20% in the month of sale, 50% in the following month, and 30% in the second month following the sale. Each month the ending inventory exactly equals 50% of the cost of next month's sales. The markup on goods is 25% of cost. Inventory purchases are paid in the month following the purchase. Monthly expenses are as follows: Salaries and wages $10,000; Depreciation $4,000; Utlites $1,000; Other $1,700. Property taxes of $15,000 are due and payable on July 15,2021. Advertising fees of $6,000 must be paid on August 20,2021. A lease on a new storage facility is scheduled to begin on September 2, 2021.Monthly payments are $5,000. The company has a policy to maintain a minimum cash balance of $10,000. If necessary , it will borrow to meet its short term needs. All borrowing is done at the end of the month. All payments on principal and interest are made at the end of a month. The annual interest rate is 9%. The company must borrow in multiples of $1,000. The balance sheet as of June 30, 2021 is as follows: Cash $ 13,550 Accounts Receivable 88,200 Inventory 36,000 Plant and Equipment, net 425,000 Accounts Payable $ 84,000 Ordinary Share Capital 210,000 Retained Earnings 268,750 4.) How much is the cost of goods sold for the 3rd quarter a. $356,000 b. $260,000 c. $248,000 d. $348,000 5.) What is the budgeted purchases for the 3 quarter? a. $268,000 b. $130,000 c. $174,000 d. $250,000 6.) What is the total cash disbursements for inventory in the 3rd quarter? a. $254,000 b. $352,000 c. $268,000 d. $250,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
Nestee controller for Mactan Relaters has assembled the following data to assist in the preparation of a
- Sales- May $100,000 ;June $120,000; July $90,000 ; August $100,000
September $135,000; October $110,000
- Each month, 30% of sales are for cash and 70% ore on credit. The collection pattern for credit sales is 20% in the month of sale, 50% in the following month, and 30% in the second month following the sale.
- Each month the ending inventory exactly equals 50% of the cost of next month's sales. The markup on goods is 25% of cost.
- Inventory purchases are paid in the month following the purchase.
- Monthly expenses are as follows: Salaries and wages $10,000;
Depreciation $4,000; Utlites $1,000; Other $1,700. - Property taxes of $15,000 are due and payable on July 15,2021.
- Advertising fees of $6,000 must be paid on August 20,2021.
- A lease on a new storage facility is scheduled to begin on September 2, 2021.Monthly payments are $5,000.
- The company has a policy to maintain a minimum cash balance of $10,000. If necessary , it will borrow to meet its short term needs. All borrowing is done at the end of the month. All payments on principal and interest are made at the end of a month. The annual interest rate is 9%. The company must borrow in multiples of $1,000.
- The
balance sheet as of June 30, 2021 is as follows:
| Cash | $ 13,550 | |
| 88,200 | ||
|
Inventory |
36,000 | |
| Plant and Equipment, net | 425,000 | |
| Accounts Payable | $ 84,000 | |
| Ordinary Share Capital | 210,000 | |
| 268,750 |
4.) How much is the cost of goods sold for the 3rd quarter
a. $356,000
b. $260,000
c. $248,000
d. $348,000
5.) What is the budgeted purchases for the 3 quarter?
a. $268,000
b. $130,000
c. $174,000
d. $250,000
6.) What is the total cash disbursements for inventory in the 3rd quarter?
a. $254,000
b. $352,000
c. $268,000
d. $250,000
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