71. Sparks Corporation has a cash balance of $7,500 on April 1. The company must maintain a
minimum cash balance of $6,000. During April, expected cash receipts are $48,000. Cash
disbursements during the month are expected to total $52,000. Ignoring interest payments, during
April the company will need to borrow:
72. For May, Young Corporation has budgeted its cash receipts at $125,000 and its cash
disbursements at $138,000. The company’s cash balance on May 1 is $17,000. If the desired May 31
cash balance is $20,000, then how much cash must the company borrow during the month (before
considering any interest payments)?
73. Harrti Corporation has budgeted for the following sales:
July $425,000
August $510,000
September $605,000
October $830,000
November $715,000
December $680,000
Sales are collected as follows: 10% in the month of sale; 60% in the month following the sale; and
the remaining 30% in the second month following the sale. In Razz‘s budgeted balance sheet at
December 31, at what amount will accounts receivable be shown?
74. The Khaki Corporation has the following budgeted sales data:
January February March April
Cash Sales $70,000 $90,000 $80,000 $70,000
Credit Sales $400,000 $350,000 $300,000 $320,000
The regular pattern of collection of credit sales is 40% in the month of sale, 50% in the month
following sale, and the remainder in the second month following the month of sale. There are no bad
debts.
The budgeted accounts receivable balance on February 28 would be:
75. The Khaki Corporation has the following budgeted sales data:
January February March April
Cash Sales $70,000 $90,000 $80,000 $70,000
Credit Sales $400,000 $350,000 $300,000 $320,000
The regular pattern of collection of credit sales is 40% in the month of sale, 50% in the month
following sale, and the remainder in the second month following the month of sale. There are no bad
debts.
The budgeted cash receipts for April would be:
76. Home Corporation will open a new store on January 1. Based on experience from its other
retail outlets, Home Corporation is making the following sales projections:
Cash Sales Credit Sales
January $60,000 $40,000
February $30,000 $50,000
March $40,000 $60,000
April $40,000 $80,000
Home Corporation estimates that 70% of the credit sales will be collected in the month following the
month of sale, with the balance collected in the second month following the month of sale.
Based on these data, the balance in accounts receivable on January 31 will be:
77. Home Corporation will open a new store on January 1. Based on experience from its other
retail outlets, Home Corporation is making the following sales projections:
Cash Sales Credit Sales
January $60,000 $40,000
February $30,000 $50,000
March $40,000 $60,000
April $40,000 $80,000
Home Corporation estimates that 70% of the credit sales will be collected in the month following the
month of sale, with the balance collected in the second month following the month of sale.
The March 31 balance in accounts receivable will be:
7-47
78. Home Corporation will open a new store on January 1. Based on experience from its other
retail outlets, Home Corporation is making the following sales projections:
Cash Sales Credit Sales
January $60,000 $40,000
February $30,000 $50,000
March $40,000 $60,000
April $40,000 $80,000
Home Corporation estimates that 70% of the credit sales will be collected in the month following the
month of sale, with the balance collected in the second month following the month of sale.
In a cash budget for April, the total cash receipts will be:
79. Richards Corporation has the following budgeted sales for the first half of next year:
Cash Sales Credit Sales
January $80,000 $350,000
February $60,000 $200,000
March $50,000 $145,000
April $45,000 $130,000
May $55,000 $170,000
June $50,000 $150,000
The company is in the process of preparing a cash budget and must determine the expected cash
collections by month. To this end, the following information has been assembled:
Collections on credit sales:
60% in month of sale
30% in month following sale
10% in second month following sale
The accounts receivable balance on January 1 is $70,000. Of this amount, $60,000 represents
uncollected December sales and $10,000 represents uncollected November sales.
The total cash collected during January would be:
80. Richards Corporation has the following budgeted sales for the first half of next year:
Cash Sales Credit Sales
January $80,000 $350,000
February $60,000 $200,000
March $50,000 $145,000
April $45,000 $130,000
May $55,000 $170,000
June $50,000 $150,000
The company is in the process of preparing a cash budget and must determine the expected cash
collections by month. To this end, the following information has been assembled:
Collections on credit sales:
60% in month of sale
30% in month following sale
10% in second month following sale
The accounts receivable balance on January 1 is $70,000. Of this amount, $60,000 represents
uncollected December sales and $10,000 represents uncollected November sales.
What is the budgeted accounts receivable balance on May 30?
81. Bracken Corporation is a small wholesaler of gourmet food products. Data regarding the
store’s operations follow:
o Sales are budgeted at $330,000 for November, $340,000 for December, and $340,000 for January.
o Collections are expected to be 80% in the month of sale, 17% in the month following the sale, and
3% uncollectible.
o The cost of goods sold is 75% of sales.
o The company would like to maintain ending merchandise inventories equal to 70% of the next
month’s cost of goods sold. Payment for merchandise is made in the month following the purchase.
o Other monthly expenses to be paid in cash are $21,800.
o Monthly depreciation is $19,000.
o Ignore taxes.
Balance Sheet
October 31
Assets
Cash $28,000
Accounts receivable, net of allowance for uncollectible accounts 76,000
Merchandise inventory 173,250
Property, plant and equipment, net of $604,000 accumulated depreciation 1,170,000
Total assets $1,447,250
Liabilities and Stockholders’ Equity
Accounts payable $255,000
Common stock 840,000
Retained earnings 352,250
Total liabilities and stockholders’ equity $1,447,250
Expected cash collections in December are:
82. Bracken Corporation is a small wholesaler of gourmet food products. Data regarding the
store’s operations follow:
o Sales are budgeted at $330,000 for November, $340,000 for December, and $340,000 for January.
o Collections are expected to be 80% in the month of sale, 17% in the month following the sale, and
3% uncollectible.
o The cost of goods sold is 75% of sales.
o The company would like to maintain ending merchandise inventories equal to 70% of the next
month’s cost of goods sold. Payment for merchandise is made in the month following the purchase.
o Other monthly expenses to be paid in cash are $21,800.
o Monthly depreciation is $19,000.
o Ignore taxes.
Balance Sheet
October 31
Assets
Cash $28,000
Accounts receivable, net of allowance for uncollectible accounts 76,000
Merchandise inventory 173,250
Property, plant and equipment, net of $604,000 accumulated depreciation 1,170,000
Total assets $1,447,250
Liabilities and Stockholders’ Equity
Accounts payable $255,000
Common stock 840,000
Retained earnings 352,250
Total liabilities and stockholders’ equity $1,447,250
The cost of December merchandise purchases would be:
83. Bracken Corporation is a small wholesaler of gourmet food products. Data regarding the
store’s operations follow:
o Sales are budgeted at $330,000 for November, $340,000 for December, and $340,000 for January.
o Collections are expected to be 80% in the month of sale, 17% in the month following the sale, and
3% uncollectible.
o The cost of goods sold is 75% of sales.
o The company would like to maintain ending merchandise inventories equal to 70% of the next
month’s cost of goods sold. Payment for merchandise is made in the month following the purchase.
o Other monthly expenses to be paid in cash are $21,800.
o Monthly depreciation is $19,000.
o Ignore taxes.
Balance Sheet
October 31
Assets
Cash $28,000
Accounts receivable, net of allowance for uncollectible accounts 76,000
Merchandise inventory 173,250
Property, plant and equipment, net of $604,000 accumulated depreciation 1,170,000
Total assets $1,447,250
Liabilities and Stockholders’ Equity
Accounts payable $255,000
Common stock 840,000
Retained earnings 352,250
Total liabilities and stockholders’ equity $1,447,250
December cash disbursements for merchandise purchases would be:
84. Bracken Corporation is a small wholesaler of gourmet food products. Data regarding the
store’s operations follow:
o Sales are budgeted at $330,000 for November, $340,000 for December, and $340,000 for January.
o Collections are expected to be 80% in the month of sale, 17% in the month following the sale, and
3% uncollectible.
o The cost of goods sold is 75% of sales.
o The company would like to maintain ending merchandise inventories equal to 70% of the next
month’s cost of goods sold. Payment for merchandise is made in the month following the purchase.
o Other monthly expenses to be paid in cash are $21,800.
o Monthly depreciation is $19,000.
o Ignore taxes.
Balance Sheet
October 31
Assets
Cash $28,000
Accounts receivable, net of allowance for uncollectible accounts 76,000
Merchandise inventory 173,250
Property, plant and equipment, net of $604,000 accumulated depreciation 1,170,000
Total assets $1,447,250
Liabilities and Stockholders’ Equity
Accounts payable $255,000
Common stock 840,000
Retained earnings 352,250
Total liabilities and stockholders’ equity $1,447,250
The difference between cash receipts and cash disbursements for December would be:
85. Dilbert Farm Supply is located in a small town in the rural west. Data regarding the store’s
operations follow:
o Sales are budgeted at $260,000 for November, $230,000 for December, and $210,000 for January.
o Collections are expected to be 80% in the month of sale, 19% in the month following the sale, and
1% uncollectible.
o The cost of goods sold is 65% of sales.
o The company desires to have an ending merchandise inventory at the end of each month equal to
60% of the next month’s cost of goods sold. Payment for merchandise is made in the month following
the purchase.
o Other monthly expenses to be paid in cash are $20,300.
o Monthly depreciation is $20,000.
o Ignore taxes.
Balance Sheet
October 31
Assets
Cash $27,000
Accounts receivable, net of allowance for uncollectible accounts 79,000
Merchandise inventory 101,400
Property, plant and equipment, net of $574,000 accumulated depreciation 1,082,000
Total assets $1,289,400
Liabilities and Stockholders’ Equity
Accounts payable $169,000
Common stock 740,000
Retained earnings 380,400
Total liabilities and stockholders’ equity $1,289,400
Expected cash collections in December are:
86. Dilbert Farm Supply is located in a small town in the rural west. Data regarding the store’s
operations follow:
o Sales are budgeted at $260,000 for November, $230,000 for December, and $210,000 for January.
o Collections are expected to be 80% in the month of sale, 19% in the month following the sale, and
1% uncollectible.
o The cost of goods sold is 65% of sales.
o The company desires to have an ending merchandise inventory at the end of each month equal to
60% of the next month’s cost of goods sold. Payment for merchandise is made in the month following
the purchase.
o Other monthly expenses to be paid in cash are $20,300.
o Monthly depreciation is $20,000.
o Ignore taxes.
Balance Sheet
October 31
Assets
Cash $27,000
Accounts receivable, net of allowance for uncollectible accounts 79,000
Merchandise inventory 101,400
Property, plant and equipment, net of $574,000 accumulated depreciation 1,082,000
Total assets $1,289,400
Liabilities and Stockholders’ Equity
Accounts payable $169,000
Common stock 740,000
Retained earnings 380,400
Total liabilities and stockholders’ equity $1,289,400
The cost of December merchandise purchases would be:
