Exercise 22-22 (30 minutes)
Mike’s Motors Corp.
Cash Budget
For July, August, and September
July August September
Beginning cash balance $34,000 $30,000 $30,000
Cash receipts 85,000 111,000 150,000
Loan balance
Loan balance, Beg. of month $0 $24,000 $13,380
Exercise 22-23 (30 minutes)
1. Merchandise Purchases Budget
Note: Shaded numbers represent known information provided in the exercise.
Walker Company
Merchandise Purchases Budget
For July, August, and September
July August September
Next month’s budgeted sales.............. 315,000 270,000 200,000 (10)
Ratio of inventory to next month sales. x 15% (9) x 15% (9) x 15% (9)
The following notes (1) through (10) provide supporting calculations and explanations.
Notes: (1) September required units
Ending inventory 30,000
(2) September beginning Inventory
Total required (1 above) 300,000
(3) September Beginning Inventory = August Ending Inventory
(4) August required units
Ending inventory 40,500
Exercise 22-23 (concluded)
Notes: concluded
(5) August beginning inventory
Total required (4 above) 355,500
(6) August Beginning Inventory = July Ending Inventory
(7) July required units
Ending inventory 47,250
(8) July Beginning Inventory
Total required (7 above) 227,250
(9) Percent of Sales to be held as Ending Inventory
This percentage is constant for the three months.
(10) October expected sales
Exercise 22-24 (25 minutes)
ACCO COMPANY
Cash Budget
For Month Ended July 31
Beginning cash balance……………………………………..…$ 50,000
Cash receipts from sales (note 1)……………………………. 1,364,000
Total cash available..………….………………….….............. $1,414,000
Cash disbursements
Supporting calculations
(1) Cash receipts in July from sales
From May sales ($1,720,000 x 20%)….…..…... $ 344,000
(2) Cash disbursements in July for merchandise
For June purchases ($700,000 x 40%)…..…... $ 280,000
Exercise 22-25 (45 minutes)
ACCO COMPANY
Budgeted Income Statement
For Month Ended July 31
Sales (from Exercise 22-24)………………………………………… $1,400,000
Cost of goods sold (note 1)……………………………………… 770,000
Gross profit……………………………………………..…………… 630,000
Operating expenses
Supporting calculations
(1) Cost of goods sold
(2) Salaries expense
Cash paid……………………………………………...… $ 275,000
(3) Income tax expense
Pre-tax income………..….….............................. $ 102,400
Exercise 22-25 (Continued)
ACCO COMPANY
Budgeted Balance Sheet
As of July 31
ASSETS
Cash (from Exercise 22-24)…………….……......................... $ 122,400
Accounts receivable (note 1)……………………................. 1,220,000
Supporting calculations
(1) Accounts receivable
June sales (20% x $1,200,000)………..…………..…….....$ 240,000
July sales (70% x $1,400,000)……………………..…...... 980,000
Total……………………………………………………………………$ 1,220,000
(2) Accumulated depreciation
Exercise 22-26 (30 minutes)
Preliminary calculations (sales, cost of sales, beginning and ending inventory)
August September October November
Sales………………………………………………….…. $325,000 $ 320,000 $250,000 $310,000
Merchandise purchases budgets (* denotes from preliminary calculations)
August September October
Budgeted ending inventory (*).......................$ 38,400 $ 30,000 $ 37,200
Cash payments for purchases (on accounts) in October
Dollars Percent Paid
For purchases from August..……….…………...$194,400 15% $ 29,160
Exercise 22-27 (25 minutes)
1. Budgeted merchandise purchases
June July August
Ending accounts payable..…....................$ 200,000 $ 235,000 $ 195,000
2. Budgeted cost of goods sold
June July August
Exercise 22-28 (40 minutes)
1.
Preliminary calculations (sales, cost of sales, beginning inventory)
July August September October November
Budgeted sales…………………………..$350,000 $290,000 $320,000 $275,000 $265,000
Budgeted merchandise purchases
July August September October
Budgeted ending inventory.................$ 40,600 $ 44,800 $ 38,500 $ 37,100
2.
Budgeted payments on accounts payable in September
Purchases Percent Paid Dollars Paid
For purchases from September…........ $217,700 25% $ 54,425
Budgeted payments on accounts payable in October
Purchases Percent Paid Dollars Paid
For purchases from October............... $191,100 25% $ 47,775
3.
Budgeted balance of accounts payable at the end of September
Purchases Percent Unpaid Dollars Unpaid
From purchases in September............$217,700 75% $163,275
Budgeted balance of accounts payable at the end of October
Purchases Percent Unpaid Dollars Unpaid
From purchases in October.................$191,100 75% $143,325