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96. Randall Company is a merchandising company that sells a single product. The company’s
inventories, production, and sales in units for the next three months have been forecasted as
follows:
Units are sold for $12 each. One fourth of all sales are paid for in the month of sale and the
balance are paid for in the following month. Accounts receivable at September 30 totaled
$450,000.
Merchandise is purchased for $7 per unit. Half of the purchases are paid for in the month of
the purchase and the remainder are paid for in the month following purchase. Selling and
administrative expenses are expected to total $120,000 each month. One half of these
expenses will be paid in the month in which they are incurred and the balance will be paid in
the following month. There is no depreciation. Accounts payable at September 30 totaled
$290,000.
Cash at September 30 totaled $80,000. A payment of $300,000 for purchase of equipment is
scheduled for November, and a dividend of $200,000 is to be paid in December.
Required:
a. Prepare a schedule of expected cash collections for each of the months of October,
November, and December.
b. Prepare a schedule showing expected cash disbursements for merchandise purchases and
selling and administrative expenses for each of the months October, November, and
December.
c. Prepare a cash budget for each of the months October, November, and December. There is
no minimum required ending cash balance.
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97. Welnor Industrial Gas Corporation supplies acetylene and other compressed gases to
industry. Data regarding the store’s operations follow:
• Sales are budgeted at $320,000 for November, $340,000 for December, and $330,000 for
January.
• Collections are expected to be 75% in the month of sale, 20% in the month following the
sale, and 5% uncollectible.
• The cost of goods sold is 65% of sales.
• The company desires ending merchandise inventory to equal 80% of the following month’s
cost of goods sold. Payment for merchandise is made in the month following the purchase.
• Other monthly expenses to be paid in cash are $21,000.
• Monthly depreciation is $16,000.
• Ignore taxes.
Required:
a. Prepare a Schedule of Expected Cash Collections for November and December.
b. Prepare a Merchandise Purchases Budget for November and December.
c. Prepare Cash Budgets for November and December.
d. Prepare Budgeted Income Statements for November and December.
e. Prepare a Budgeted Balance Sheet for the end of December.
98. Capp Corporation is a wholesaler of industrial goods. Data regarding the store’s operations
follow:
• Sales are budgeted at $350,000 for November, $360,000 for December, and $340,000 for
January.
• Collections are expected to be 60% in the month of sale, 39% in the month following the
sale, and 1% uncollectible.
• The cost of goods sold is 75% of sales.
• The company desires an ending merchandise inventory equal to 40% of the following
month’s cost of goods sold. Payment for merchandise is made in the month following the
purchase.
• The November beginning balance in the accounts receivable account is $70,000.
• The November beginning balance in the accounts payable account is $257,000.
Required:
a. Prepare a Schedule of Expected Cash Collections for November and December.
b. Prepare a Merchandise Purchases Budget for November and December.
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99. Edwards Company has projected sales and production in units for the second quarter of
the year as follows:
Required:
a. Cash production costs are budgeted at $6 per unit produced. Of these production costs, 40%
are paid in the month in which they are incurred and the balance in the following month.
Selling and administrative expenses (all paid in cash) amount to $60,000 per month. The
accounts payable balance on March 31 totals $96,000, all of which will be paid in April.
Prepare a schedule for each month showing budgeted cash disbursements for Edwards
Company.
b. Assume that all units will be sold on account for $15 each. Cash collections from sales are
budgeted at 60% in the month of sale, 30% in the month following the month of sale and the
remaining 10% in the second month following the month of sale. Accounts receivable on
March 31 totaled $255,000 $(45,000 from February’s sales and the remainder from March.)
Prepare a schedule for each month showing budgeted cash receipts for Edwards Company.
100. Kindschuh Corporation is working on its direct labor budget for the next two months.
Each unit of output requires 0.07 direct labor-hours. The direct labor rate is $8.50 per direct
labor-hour. The production budget calls for producing 4,800 units in June and 5,300 units in
July.
Required:
Construct the direct labor budget for the next two months, assuming that the direct labor work
force is fully adjusted to the total direct labor-hours needed each month.
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101. Capati Corporation is working on its direct labor budget for the next two months. Each
unit of output requires 0.41 direct labor-hours. The direct labor rate is $8.50 per direct labor-
hour. The production budget calls for producing 2,300 units in August and 2,200 units in
September. The company guarantees its direct labor workers a 40-hour paid work week. With
the number of workers currently employed, that means that the company is committed to
paying its direct labor work force for at least 960 hours in total each month even if there is not
enough work to keep them busy.
Required:
Construct the direct labor budget for the next two months.
102. Mccoo Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The
variable overhead rate is $1.30 per direct labor-hour. The company’s budgeted fixed
manufacturing overhead is $98,900 per month, which includes depreciation of $19,780. All
other fixed manufacturing overhead costs represent current cash flows. The September direct
labor budget indicates that 8,600 direct labor-hours will be required in that month.
Required:
a. Determine the cash disbursement for manufacturing overhead for September.
b. Determine the predetermined overhead rate for September.
103. The manufacturing overhead budget of Lewison Corporation is based on budgeted direct
labor-hours. The June direct labor budget indicates that 5,800 direct labor-hours will be
required in that month. The variable overhead rate is $7.70 per direct labor-hour. The
company’s budgeted fixed manufacturing overhead is $111,360 per month, which includes
depreciation of $17,400. All other fixed manufacturing overhead costs represent current cash
flows.
Required:
a. Determine the cash disbursement for manufacturing overhead for June. Show your work!
b. Determine the predetermined overhead rate for June. Show your work!
104. Lahay Inc. bases its selling and administrative expense budget on the number of units
sold. The variable selling and administrative expense is $4.30 per unit. The budgeted fixed
selling and administrative expense is $30,240 per month, which includes depreciation of
$3,510. The remainder of the fixed selling and administrative expense represents current cash
flows. The sales budget shows 2,700 units are planned to be sold in April.
Required:
Prepare the selling and administrative expense budget for April.
105. The selling and administrative expense budget of Fenley Corporation is based on the
number of units sold, which are budgeted to be 2,500 units in January. The variable selling
and administrative expense is $4.40 per unit. The budgeted fixed selling and administrative
expense is $35,750 per month, which includes depreciation of $4,000. The remainder of the
fixed selling and administrative expense represents current cash flows.
Required:
Prepare the selling and administrative expense budget for January.
106. Enciso 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.
107. Wehr 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.