Problem 20-7A (Continued)
Part 4
Cash payments on product purchases (for June and July)
From purchases in Total % Paid June July
May…………….….…….….….…….…...$308,000 40% $123,200
June………………..………..….….……..638,000 60 382,800
….………..……………………………. 40 $255,200
Part 5
AZTEC COMPANY
Cash Budget
June and July
June July
Beginning cash balance………………….………….….….….. $100,000 $100,000
Cash receipts from customers………….….….….…….….. 597,600 820,800
Total available cash…………….……..….….….….…….….…. 697,600 920,800
Cash disbursements
Additional loan from bank………………..………………..….. 18,650 0
Repayment of loan to bank……………………….…….….…. ________ 43,650
Ending cash balance…………………..….……..….….…….… $100,000 $197,353
Ending loan balance**………………………….….….….…….. $ 43,650 $ 0
Problem 20-7A (Concluded)
Part 6
Information about the need for cash in the near future would be helpful to
the management of Aztec Company because they would be able to enter
In addition, a good cash budget is likely to be helpful to management in
negotiating the terms of the loan. In this situation, the company can tell the
Financial and Managerial Accounting, 6th Edition
Problem 20-8A (130 minutes)
Part 1
DIMSDALE SPORTS CO.
Sales Budgets
January, February, and March 2016
Budgeted
Units
Budgeted
Unit Price
Budgeted
Total Dollars
January 2016……………………..….….……..….….……7,000 $55 $ 385,000
February 2016…………………………………………..…..9,000 55 495,000
Part 2
DIMSDALE SPORTS CO.
Merchandise Purchases Budgets
January, February, and March 2016
January February March Total
Next month’s budgeted sales…….……… 9,000 11,000 10,000
Ratio of inventory to future sales.........x 20% x 20% x 20%
Budgeted ending inventory………..…….. 1,800 2,200 2,000
Add budgeted sales…………………………. 7,000 9,000 11,000
Required available merchandise.......... 8,800 11,200 13,000
Part 3
DIMSDALE SPORTS CO.
Selling Expense Budgets
January, February, and March 2016
January February March Total
Budgeted sales……………...……..……..…$385,000 $495,000 $605,000
Sales commission percent..................x 20% x 20% x 20%
Sales commissions expense…............ 77,000 99,000 121,000 $297,000
Problem 20-8A (Continued)
Part 4
DIMSDALE SPORTS CO.
General and Administrative Expense Budgets
January, February, and March 2016
January February March Total
Salaries……………..…….…….….….……..….….$12,000 $12,000 $12,000 $36,000
* Depreciation expense calculations
Annual
Amount January February March Total
Equipment owned
on 12/31/2015…....…......….. $67,500 $5,625 $5,625 $5,625 $16,875
Purchased in January......... 4,500 375 375 375 1,125
Part 5
DIMSDALE SPORTS CO.
Capital Expenditures Budgets
January, February, and March 2016
January February March
Equipment purchases…………………..……………….$36,000 $96,000 $ 28,800
Financial and Managerial Accounting, 6th Edition
Problem 20-8A (Continued)
Part 6
DIMSDALE SPORTS CO.
Cash Budgets
January, February, and March 2016
January February March
Beginning cash balance……………….…….…..….…$ 36,000 $ 30,100 $210,300
Cash receipts from customers (note A)………....... 221,250 697,000 489,500
Total cash available…………….………………………...257,250 727,100 699,800
Cash disbursements
Payments for merchandise (note B)………………..80,000 302,800 147,600
Sales commissions……………..………………….…..77,000 99,000 121,000
Total cash disbursements………….….….……..…... 212,150 516,800 556,400
Preliminary cash balance………………….….….…...45,100 210,300 143,400
Repayment of loan to bank…..….….…….….…..…. (15,000 ) _______ ________
Ending cash balance………………….………………….$ 30,100 $210,300 $143,400
Loan balance, end of month………….……………….$ 0 $ 0 $ 0
Supporting calculations January February March Total
Note A: Cash receipts from customers
Total sales………….……………....……………..…….$385,000 $495,000 $605,000 $1,485,000
Cash sales (25%)………………..………..………….. 96,250 123,750 151,250 371,250
Credit sales (75%)………………………………..…… 288,750 371,250 453,750 1,113,750
Cash collections
Note B: Cash payments for merchandise
Credit purchases………………..……..…………..…$114,000 $282,000 $324,000 $720,000
Accounts payables at 12/31/2015 $ 80,000 $280,000 $360,000
Month after purchase (20%)………………...….... 22,800 $ 56,400 79,200
Problem 20-8A (Continued)
Part 7
DIMSDALE SPORTS CO.
Budgeted Income Statement
For Three Months Ended March 31, 2016
Sales……………..……………………………..……………….….….. $1,485,000
Maintenance expense…………….………………………….... 6,000
Depreciation expense…………….………………………….... 20,300
Interest expense…………..……………………………….…….. 150 374,450
Part 8
DIMSDALE SPORTS CO.
Budgeted Balance Sheet
March 31, 2016
ASSETS
Cash……………………….….….….……..….….…. $ 143,400 Cash budget
Accounts receivable…………….…….….….… 602,250 Note C
Total assets…………………………………………. $1,568,650
LIABILITIES AND EQUITY
Accounts payable…………….….….…….….... $ 549,600 Note G
Financial and Managerial Accounting, 6th Edition
Problem 20-8A (Concluded)
Supporting Footnotes
Note D
Beginning inventory……………..………………..……......…......$ 150,000
Purchases……………………..………………..…......…......…....… 720,000
Less cost of goods sold……………………………………………. (810,000 )
Ending inventory*…………………………….………..……….…….$ 60,000
*Also equals 2,000 units @ $30 = $60,000
Note F
Beginning accumulated depreciation………......…....….....$ 67,500
Depreciation expense…………………………………………..…… 20,300
Total…………………………………………………………………………$ 87,800
Note G
PROBLEM SET B
Problem 20-1B (30 minutes)
Part 1
NSA COMPANY
Production Budget (in units)
Second Quarter
Budgeted ending inventory (bats)…………….………………………………….. 6,000
Add budgeted sales………………….…………………………………….…….….…. 250,000
Part 2
NSA COMPANY
Direct Materials Budget (in lbs, except where noted)
Second Quarter
Materials (aluminum) needed for production (248,000 x 3)…………. 744,000
Add budgeted ending inventory (aluminum)………..……………………. 12,000
Total materials (aluminum) requirements……….……………..….….…… 756,000
Problem 20-1B (concluded)
Part 3
NSA COMPANY
Direct Labor Budget
Second Quarter
Units to be produced…………..…………………………….…….….…. 248,000
Labor requirements per unit (hours)…………….…………………. x 0.50
Part 4
NSA COMPANY
Factory Overhead Budget
Second Quarter
Total labor hours needed……………….………..….…….….….……. 124,000
Variable overhead rate per direct labor hour..….….……........ x $12
Problem 20-2B (30 minutes)
(1)
A1 MANUFACTURING
Cash Receipts Budget
For July, August, and September
July August Sept.
Sales……………..………………….……..….….….… $63,400 $80,600 $48,600
Less ending accts. receivable (80%).......... 50,720 64,480 38,880
Cash receipts from
Financial and Managerial Accounting, 6th Edition