Financial and Managerial Accounting: Information for Decisions
Financial and Managerial Accounting: Information for Decisions
6th Edition
ISBN: 9780078025761
Author: John J Wild, Ken Shaw Accounting Professor, Barbara Chiappetta Fundamental Accounting Principles
Publisher: McGraw-Hill Education
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Chapter 20, Problem 2PSA

(1)

To determine

To prepare: Cash receipts budget for the month of July, August and September.

(1)

Expert Solution
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Explanation of Solution

    Cash receipts
    Particulars July Amount ($) August Amount ($) September Amount ($)
    Budgeted sales 64,000 80,000 48,000
    Cash collection of sales:
    Current month (20%) 12,800 16,000 9,600
    Previous month (80%) 45,000 51,200 64,000
    Total 57,800 67,200 73,600
    Table (1)

(2)

To determine

To prepare: Monthly cash budget for the month of July, August, September.

(2)

Expert Solution
Check Mark

Explanation of Solution

    Company B
    Cash Budget
    Particulars July Amount($) August Amount($) September Amount($)
    Beginning cash balance 15,000 15,000 25,504
    Add: Cash receipts 57,800 67,200 73,600
    Total cash available 72,800 82,200 99,104
    Less: Cash disbursement (working note 1) 57,350 52,146 49,700
    Preliminary cash balance 15,450 30,054 49,404
    Less: Required ending balance 15,000 15,000 15,000
    Surplus 450 15,054 34,404
    Beginning balance of loan 5,000 4,550 0
    Add: Additional loan from bank 0 0 0
    Less: Repayment of loan 450 4,550 0
    Ending balance of loan 4,550 0 0
    Cash balance to be carried forward after payment of loan. 15,000 25,504 49,404
    Table (2)

Working Note 1:

    Cash Disbursements
    Particulars July Amount($) August Amount($) September Amount($)
    Interest (working note 2) 50 46 0
    Direct material 16,160 13,440 13,760
    Direct labor 4,040 3,360 3,440
    Factory overhead 20,200 16,800 17,200
    Sales commission 6,400 8,000 4,800
    Office salaries 4,000 4,000 4,000
    Rent 6,500 6,500 6,500
    Total 57,350 52,146 49,700
    Table (3)

Working note 2:

Formula to calculate interest expense for the month,

    Interest expense=Beginning balance of loan×1% 

For July,
Beginning balance of loan is $5,000.

Substitute $5,000 for beginning balance.

    Interest expense=$5,000×1% =$50

For August,
Beginning balance of loan $4,550 (calculated).

Substitute $4,550 for beginning balance.

    Interest expense=$4,550×1% =$46

For September,
Beginning balance of loan $0 (calculated).

Substitute $0 for beginning balance.

    Interest expense=$0×1% =$0

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Chapter 20 Solutions

Financial and Managerial Accounting: Information for Decisions

Ch. 20 - How does budgeting help management coordinate and...Ch. 20 - Why is the sales budget so important to the...Ch. 20 - What is the selling expense budget? What is the...Ch. 20 - Budgeting promotes good decision making by...Ch. 20 - GOOGLE Google prepares a cash budget. What is a...Ch. 20 - Prob. 11DQCh. 20 - Prob. 12DQCh. 20 - Prob. 13DQCh. 20 - Prob. 14DQCh. 20 - Prob. 1QSCh. 20 - Prob. 2QSCh. 20 - Prob. 3QSCh. 20 - Prob. 4QSCh. 20 - Prob. 5QSCh. 20 - Prob. 6QSCh. 20 - Prob. 7QSCh. 20 - Prob. 8QSCh. 20 - Prob. 9QSCh. 20 - Prob. 10QSCh. 20 - Prob. 11QSCh. 20 - Prob. 12QSCh. 20 - Prob. 13QSCh. 20 - Prob. 14QSCh. 20 - Prob. 15QSCh. 20 - Manufacturing: Production budget P1 Atlantic Surf...Ch. 20 - Prob. 17QSCh. 20 - Prob. 18QSCh. 20 - Prob. 19QSCh. 20 - Cash receipts, with uncollectible accounts P2 The...Ch. 20 - Cash receipts, with uncollectible accounts P2 Well...Ch. 20 - Prob. 22QSCh. 20 - Prob. 23QSCh. 20 - Prob. 24QSCh. 20 - Prob. 25QSCh. 20 - Prob. 26QSCh. 20 - Prob. 27QSCh. 20 - Prob. 28QSCh. 20 - Prob. 29QSCh. 20 - Prob. 30QSCh. 20 - Prob. 31QSCh. 20 - Prob. 32QSCh. 20 - Prob. 1ECh. 20 - Prob. 2ECh. 20 - Prob. 3ECh. 20 - Prob. 4ECh. 20 - Exercise 20-5 Manufacturing: Direct labor budget...Ch. 20 - Prob. 6ECh. 20 - Prob. 7ECh. 20 - Prob. 8ECh. 20 - Prob. 9ECh. 20 - Prob. 10ECh. 20 - Prob. 11ECh. 20 - Prob. 12ECh. 20 - Prob. 13ECh. 20 - Prob. 14ECh. 20 - Prob. 15ECh. 20 - Prob. 16ECh. 20 - Prob. 17ECh. 20 - Prob. 18ECh. 20 - Prob. 19ECh. 20 - Prob. 20ECh. 20 - Prob. 21ECh. 20 - Prob. 22ECh. 20 - Prob. 23ECh. 20 - Prob. 24ECh. 20 - Prob. 25ECh. 20 - Prob. 26ECh. 20 - Prob. 27ECh. 20 - Prob. 28ECh. 20 - Prob. 29ECh. 20 - Prob. 30ECh. 20 - Prob. 31ECh. 20 - Prob. 32ECh. 20 - Prob. 33ECh. 20 - Prob. 34ECh. 20 - Prob. 1PSACh. 20 - Prob. 2PSACh. 20 - Prob. 3PSACh. 20 - Prob. 4PSACh. 20 - Prob. 5PSACh. 20 - Prob. 6PSACh. 20 - Prob. 7PSACh. 20 - Prob. 8PSACh. 20 - Prob. 1PSBCh. 20 - Prob. 2PSBCh. 20 - Prob. 3PSBCh. 20 - Prob. 4PSBCh. 20 - Prob. 5PSBCh. 20 - Prob. 6PSBCh. 20 - Prob. 7PSBCh. 20 - Prob. 8PSBCh. 20 - Prob. 20SPCh. 20 - Prob. 1BTNCh. 20 - Prob. 2BTNCh. 20 - ETHICS CHALLENGE C1 BTN 20-3 Both the budget...Ch. 20 - Prob. 4BTNCh. 20 - Prob. 5BTNCh. 20 - Prob. 6BTNCh. 20 - Prob. 7BTNCh. 20 - Prob. 8BTNCh. 20 - Prob. 9BTN
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