130) Software Corporation is preparing its cash budget for November. The budgeted beginning
cash balance is $31,000. Budgeted cash receipts total $135,000 and budgeted cash disbursements
total $141,000. The desired ending cash balance is $50,000. The company can borrow up to
$100,000 at any time from a local bank, with interest not due until the following month.
Required:
Prepare the company’s cash budget for November in good form.
131) Things Inc. is preparing its cash budget for April. The budgeted beginning cash balance is
$19,000. Budgeted cash receipts total $105,000 and budgeted cash disbursements total $98,000.
The desired ending cash balance is $50,000. The company can borrow up to $120,000 at any
time from a local bank, with interest not due until the following month.
Required:
Prepare the company’s cash budget for April in good form. Make sure to indicate what
borrowing, if any, would be needed to attain the desired ending cash balance.
132) Wings Inc. is preparing its cash budget for November. The budgeted beginning cash
balance is $10,000. Budgeted cash receipts total $100,000 and budgeted cash disbursements total
$104,000. The desired ending cash balance is $30,000.
Required:
a. Calculate the excess (deficiency) of cash available over disbursements for November.
b. To attain its desired ending cash balance for November, how much should the company
borrow.
133) The Boxer Company, a merchandising firm, has budgeted its activity for December
according to the following information:
∙ Sales at $500,000, all for cash.
∙ Merchandise Inventory on November 30 was $250,000.
∙ The cash balance at December 1 was $20,000.
∙ Marketing and administrative expenses are budgeted at $50,000 for December and are paid for
in cash.
∙ Budgeted depreciation for December is $30,000.
∙ The planned merchandise inventory on December 31 is $260,000.
∙ The cost of goods sold represents 75% of the sales price.
∙ All purchases are paid for in cash in the month of purchase.
Required:
a. What are the budgeted cash receipts for December?
b. What are the budgeted cash disbursements for December?
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134) James, Inc. makes a product that has peak sales in September of each year. The company
has prepared a sales budget for the third quarter as shown below:
Month Budgeted Sales
July $ 200,000
August 400,000
September 600,000
The company is in the process of preparing a cash budget for the third quarter and must
determine the expected cash collections by month. To this end, the following information has
been assembled:
Collections on Sales
In month of sale 60 %
In month following sale 25 %
In second month following sale 15 %
The company gives a 3% cash discount to customers paying in the month of their sale. The
company charges 2% interest to customers who pay in the second month following their sales.
The accounts receivable balance to start the quarter is $150,000: $35,000 from May’s sales and
$115,000 from June’s sales.
Required:
Prepare a schedule of cash receipts for the third quarter.
135) Davis Company has forecast its sales as follows:
August $ 180,000 (actual)
September $ 280,000 (actual)
October $ 360,000
November $ 400,000
December $ 450,000
Davis has experienced collections of 40% during the month of sale, 50% the month after the sale,
and 10% the second month after the sale.
Required:
a. Prepare a schedule of cash receipts for the 3-month period October – December.
b. What will the Accounts Receivable balance be on December 31?
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136) Parker Company has forecast its sales as follows:
November $ 190,000 (actual)
December $ 240,000 (actual)
January $ 280,000
February $ 300,000
March $ 350,000
April $ 320,000
Parker has experienced collections of 55% during the month of sale, 38% the month after the
sale, and 7% the second month after the sale.
Required:
a. Prepare a schedule of cash receipts for the 4-month period January – April.
b. What will the Accounts Receivable balance be on April 30?
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137) Thomas Company’s past experience has demonstrated that 55% of the net sales billed in a
month are collected during the month, 35% are collected in the following month and 9% are
collected in the second following month. Customers are allowed a 3% discount if payment is
made within 5 days after the billing date. 65% of the customers that pay in the month of the sale,
pay within 5 days and take the discount. A sales budget for the four months ending June 30 is as
follows:
Month Units Selling Price
March 30,000 $ 5.20
April 50,000 5.20
May 80,000 5.60
June 40,000 5.60
Required:
Prepare a schedule of cash receipts for May and June.
138) Falcon Enterprises expects the following unit sales over the next five months:
Month Unit Sales
April 400,000
May 480,000
June 540,000
July 600,000
August 560,000
Falcon’s goal is to maintain an inventory equal to 20% of next month’s sales requirements. March
31 inventory is projected to be 70,000 units.
Required:
Prepare a purchases budget (in units) for Falcon for as many months as is possible based on data
provided. Assume a 30-day month.
139) Templeton Enterprises expects the following unit sales over the next few months:
Month Unit Sales
June 100,000
July 120,000
August 135,000
September 150,000
October 140,000
November 125,000
Templeton’s goal is to maintain an inventory equal to a 6-day supply. May 31 inventory is
projected to be 18,000 units.
Required:
Prepare a purchases budget (in units) for Templeton for as many months as is possible based on
data provided. Assume a 30-day month
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140) What are the differences between strategic planning and the tactical planning process?
141) Describe what is meant by participative budgeting and give an example of a benefit and a
drawback.
142) Describe the difference between the following sales forecasting techniques: Delphi
technique, trend analysis, and econometric models.
143) Why is it more difficult to prepare a marketing and administrative budget than it is to
prepare a production budget?
144) What is the “curse of growth” with respect to budgeting and why is this a critical problem
affecting new firms?
145) Why does a service organization not need to prepare a production budget or a cost of goods
sold budget?
146) Why does budgeting create serious ethical issues for many people and give an example?
147) What does the phrase, “use it or lose it,” mean in the context of budgeting?
148) A friend of yours wants to plan a 5K fun-run for a local charity. He explains that his
strategic objective is to maximize contributions and also develop numerous scenario budgets for
the event due to several venue alternatives and weather uncertainties. He knows that you have
taken a managerial accounting course and asks for your advice. Based on this information, what
would you suggest to your friend?