Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
16th Edition
ISBN: 9780134475585
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Chapter 6, Problem 6.41P
Assume the following: Animal Gear (AG) does not make any sales on credit. AG sells only to the public and accepts cash and credit cards; 90% of its sales are to customers using credit cards, for which AG gets the cash right away, less a 2% transaction fee.
Purchases of materials are on account. AG pays for half the purchases in the period of the purchase and the other half in the following period. At the end of March, AG owes suppliers $8,000.
AG plans to replace a machine in April at a net cash cost of $13,000.
Labor, other
AG currently has a $2,000 loan at an annual interest rate of 12%. The interest is paid at the end of each month. If AG has more than $7,000 cash at the end of April it will pay back the loan. AG owes $5,000 in income taxes that need to be remitted in April. AG has cash of $5,900 on hand at the end of March.
- 1. Prepare a cash budget for April for Animal Gear.
- 2. Why do Animal Gear’s managers prepare a cash budget in addition to the revenue, expenses, and operating income budget?
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Below is the exercice and solutions but I don't understand the solution, for example the cash collection from debitors. Thanks for help.
Use the information below and prepare a cash budget for April, May, and June.
Month
Sales
Purchases
Wages
Exp.
Jan. (actual)
80,000
45,000
20,000
5,000
Feb. (actual)
80,000
40,000
18,000
6,000
Mar. (actual)
75,000
42,000
22,000
6,000
Apr. forecast
90,000
50,000
24,000
6,000
May forecast
85,000
45,000
20,000
6,000
Jun. forecast
80,000
35,000
18,000
5,000
You are further informed that:
10% of purchases and 20% of sales are for cash.
The average collection period of the company is half a month and credit purchases are paid off regularly after one month.
Wages are paid half monthly and the rent of $500, excluded in expense, is paid monthly.
Cash and bank balance on April 1 was $15,000, and the company aims to keep it below this figure at the end of every month. The…
A cash budget, by quarters, is given below for a retail company (000 omitted). The company requires a minimum cash balance
of at least $3,000 to start each quarter.
Required:
Fill in the missing amounts.
Note: Enter your answers in thousands of dollars. Cash deficiencies and Repayments should be indicated by a minus sign.
Cash balance, beginning
Add collections from customers
Total cash available
Less disbursements:
Purchase of inventory
Selling and administrative expenses
Equipment purchases
Dividends
Total disbursements
Excess (deficiency) of cash available over
disbursements
Financing:
Borrowings
Repayments (including interest) *
Total financing
Cash balance, ending
*Interest will total $1,000 for the year.
GA
1
8
84
92
53
8
2
(1)
Quarter (000 omitted)
2
3
63
45
9
2
119
13
120
30
28
2
9
4
29
2
(12)
(000 omitted)
Year
420
127
55
A cash budget, by quarters, is given below for a retail company (000 omitted). The company requires a minimum cash balance of at
least $3,000 to start each quarter.
Required:
Fill in the missing amounts. (Enter your answers in thousands of dollars. Cash deficiencies and Repayments should be indicated by
a minus sign.)
Cash balance, beginning
Add collections from customers
Total cash available
Less disbursements:
Purchase of inventory
Selling and administrative expenses
Equipment purchases
Dividends
Total disbursements
Excess (deficiency) of cash available over disbursements
Financing:
Borrowings
Repayments (including interest)*
Total financing
Cash balance, ending
*Interest will total $1,000 for the year.
Quarter 1
(000 omitted)
$
9
97
54
7
2
(5)
Quarter 2
(000 omitted)
64
45
9
2
120
12
Quarter 3
(000 omitted)
124
30
29
2
12
Quarter 4
(000 omitted)
30
2
(12)
Year (000
omitted)
431
137
55
Chapter 6 Solutions
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Ch. 6 - What are the four elements of the budgeting cycle?Ch. 6 - Define master budget.Ch. 6 - Strategy, plans, and budgets are unrelated to ore...Ch. 6 - Budgeted performance is a better criterion than...Ch. 6 - Production managers and marketing managers are...Ch. 6 - Budgets meet the cost-benefit test. They force...Ch. 6 - Define rolling budget. Give an example.Ch. 6 - Outline the steps in preparing an operating...Ch. 6 - The sales forecast is the cornerstone for...Ch. 6 - Prob. 6.10Q
Ch. 6 - Define Kaizen budgeting.Ch. 6 - Prob. 6.12QCh. 6 - Explain how the choice of the type of...Ch. 6 - What are some additional considerations that arise...Ch. 6 - Prob. 6.15QCh. 6 - Master budget. Which of the following statements...Ch. 6 - Operating and financial budgets. Which of the...Ch. 6 - Production budget. Superior Industries sales...Ch. 6 - Responsibility centers. Elmhurst Corporation is...Ch. 6 - Cash budget. Mary Jacobs, the controller of the...Ch. 6 - Sales budget, service setting. In 2017 Hart Sons,...Ch. 6 - Sales and production budget. The Coby Company...Ch. 6 - Direct material budget. Dawson Co. produces wine....Ch. 6 - Material purchases budget. The McGrath Company has...Ch. 6 - Revenues, production, and purchases budgets. The...Ch. 6 - Revenues and production budget. Saphire, Inc.,...Ch. 6 - Budgeting; direct material usage, manufacturing...Ch. 6 - Budgeting, service company. Ever Clean Company...Ch. 6 - Budgets for production and direct manufacturing...Ch. 6 - Activity-based budgeting. The Jerico store of...Ch. 6 - Kaizen approach to activity-based budgeting...Ch. 6 - Responsibility and controllability. Consider each...Ch. 6 - Responsibility, controllability, and stretch...Ch. 6 - Cash flow analysis, sensitivity analysis....Ch. 6 - Budget schedules for a manufacturer. Hale...Ch. 6 - Budgeted costs, Kaizen improvements environmental...Ch. 6 - Revenue and production budgets. (CPA, adapted) The...Ch. 6 - Budgeted income statement. (CMA, adapted) Smart...Ch. 6 - Prob. 6.39PCh. 6 - Comprehensive problem with ABC costing. Animal...Ch. 6 - Cash budget (continuation of 6-40). Refer to the...Ch. 6 - Comprehensive operating budget. Skulas, Inc.,...Ch. 6 - Cash budgeting, budgeted balance sheet....Ch. 6 - Comprehensive problem; ABC manufacturing, two...Ch. 6 - Cash budget. (Continuation of 6-44) (Appendix)...Ch. 6 - Budgeting and ethics. Jayzee Company manufactures...Ch. 6 - Kaizen budgeting for carbon emissions. Apex...Ch. 6 - Comprehensive budgeting problem; activity-based...
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