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Problem 22-6B (50 minutes)
SONY STEREO
Cash Budgets
For April, May, and June
April May June
Beginning balance......................................... $ 3,000 $ 53,000 $ 44,000
Cash receipts
Collection on accounts receivable*............ 136,000 210,000 290,200
Receipts from bank loan............................. 80,000 _______ _______
Supporting calculations
Collections of credit sales* March April May June
March sales ($180,000)—[25%: 45%: 20%: 9%]...............$ 45,000 $ 81,000 $ 36,000 $ 16,200
Payments on credit purchases** March April May June
March purchases ($100,000)—(0%: 80%: 20%)........................................$ 0 $ 80,000 $ 20,000 $ -
Problem 22-7B (70 minutes)
Part 1
Cash collections of credit sales (accounts receivable)
From sales in Total % Collected March April
January.....................................$396,000 23% $ 91,080
February................................... 495,000 35 173,250
Part 2
Budgeted ending inventories (in units)
January February March April
Next month’s budgeted sales.....................22,500 19,000 18,750 21,000
Problem 22-7B (Continued)
Part 4
Cash payments on product purchases (for March and April)
From purchases in Total % Paid March April
February......................................$261,600 70% $183,120
Part 5
CONNICK COMPANY
Cash Budget
March and April
March April
Beginning cash balance........................................................$ 50,000 $ 58,070
Cash receipts from customers..............................................
431,530 425,150
Total available cash................................................................
481,530 483,220
Cash disbursements
Part 6
Analysis Component: Information about the supply of cash in the near future
would be helpful to the management of Connick Company. A good cash
Problem 22-8B (130 minutes)
Part 1
ISLE CORPORATION
Sales Budgets
January, February, and March 2016
Budgeted
Units
Budgeted
Unit Price
Budgeted
Total Dollars
January 2016...................................................... 6,000 $45 $ 270,000
Part 2
ISLE CORPORATION
Merchandise Purchases Budgets
January, February, and March 2016
January February March Total
Next month’s budgeted sales............... 8,000 10,000 9,000
Ratio of inventory to future sales......... x 25% x 25% x 25%
Part 3
ISLE CORPORATION
Selling Expense Budgets
January, February, and March 2016
January February March Total
Budgeted sales.....................................$270,000 $360,000 $450,000
Problem 22-8B (Continued)
Part 4
ISLE CORPORATION
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
Part 5
ISLE CORPORATION
Capital Expenditures Budgets
January, February, and March 2016
January February March
Equipment purchases........................................$72,000 $96,000 $ 28,800
Problem 22-8B (Continued)
Part 6
ISLE CORPORATION
Cash Budgets
January, February, and March 2016
January February March
Beginning cash balance..................................... $ 36,000 $182,850 $ 107,850
Cash receipts from customers (note A)................ 382,500 421,500 355,500
Total cash available............................................418,500 604,350 463,350
Cash disbursements
Payments for merchandise (note B)................... 72,000 306,000 123,000
Sales commissions........................................... 54,000 72,000 90,000
Supporting calculations January February March Total
Note A: Cash receipts from customers
Total sales........................................................ $270,000 $360,000 $450,000 $1,080,000
Cash sales (25%)............................................. $ 67,500 $ 90,000 $112,500 $ 270,000
Credit sales (75%)............................................ $202,500 $270,000 $337,500 $ 810,000
Cash collections
Problem 22-8B (Continued)
Part 7
ISLE CORPORATION
Budgeted Income Statement
For Three Months Ended March 31, 2016
Sales.............................................................................. $1,080,000
Cost of goods sold (24,000 units @ $30).................... 720,000
Gross profit................................................................... 360,000
Operating expenses
Part 8
ISLE CORPORATION
Budgeted Balance Sheet
March 31, 2016
ASSETS
Cash........................................................... $ 36,000 Cash budget
Accounts receivable................................. 445,500 Note C
Inventory.................................................... 67,500 Note D
Total current assets.................................. 549,000
Problem 22-8B (Concluded)
Supporting Footnotes
Note C
Beginning receivables....................................................................$ 525,000
Note D
Beginning inventory........................................................................$ 150,000
Note E
Beginning equipment......................................................................$ 540,000
Note F
Beginning accumulated depreciation...........................................$ 67,500
Note G
Beginning accounts payable.........................................................$ 360,000
Note H
Beginning retained earnings..........................................................$ 246,000
