40 Minutes, Strong PROBLEM 23.4A
FORMER CORPORATION
a. Budgeted cash receipts for the quarter:
Collections on prior period receivables 210,000$
Add: Collections on 65% of $500,000 sales 325,000
Total receipts collected during the quarter 535,000$
c. If beginning prepayments equal the ending prepayments,
the amount expired during the period equals the
prepayments made during the period, or $20,000.
e. Given a minimum required cash balance of $10,000, the
company must attempt to obtain a loan of $13,000.
30 Minutes, Strong PROBLEM 23.5A
RIZZO’S
a. Budgeted income statement:
Budgeted sales 72,000$
Cost of goods sold (60% of sales) 43,200
Gross profit (40% of sales) 28,800$
b. Cash budget:
60 Minutes, Strong PROBLEM 23.6A
MARLEY WHOLESALE
a. MARLEY WHOLESALE
Cash Budge
t
For Third Quarter of Current Yea
r
Jul
y
A
ugus
t
Septembe
r
Cash balance at beginning of month 20,000$ 168,000$ 53,400$
Receipts:
Bank loan 194,000
Collections on receivables (Schedule 1) 120,000 280,000 345,000
Total cash available 334,000$ 448,000$ 398,400$
Disbursements:
Purchase of equipmen
t
16,000$
Supporting Schedules
Schedule 1—Estimated Cash Collections
on Receivables
Receivables outstanding at June 30 120,000$ 40,000$
July sales—80% × $300,000 240,000
Schedule 2—Estimated Merchandise Purchases
*
PROBLEM 23.6A
MARLEY WHOLESALE (concluded)
July August September
Schedule 3—Estimated Cash Payments
for Operating Expenses
Schedule 4—Estimated Cash Payments
on Accounts Payable (Including
Operating Expenses)
Accounts payable balance on June 30
(includes accrued operating expenses) 150,000$
Merchandise purchases (Schedule 2) 339,000$ 175,500$
b. It is apparent from the three-month budget that Marley will not be able to pay the bank the
50 Minutes, Medium PROBLEM 23.7A
SNELLS
a. SNELLS
Comparison of Budgeted and Actual Revenue and Expense
s
For the Year Ended December 31, 20__
Flexible Over (o
r
Budge
t
A
ctual Under) Budge
t
Net sales 10,500,000$ 10,500,000$ 0$
Cost of goods sold 6,300,000 6,180,000 (120,000)
Gross profit on sales 4,200,000$ 4,320,000$ 120,000$
b.
Comment on performance:
Operating income was better than budgeted by $168,000. This result may be attributed to
five factors: (1) a better-than-budgeted merchandise purchasing performance; (2) smaller
expenditures than budgeted for selling and promotion expenses; (3) smaller delivery expense
than planned; (4) smaller credit and collection expenses than planned; (5) these factors were
offset in part by the fact that the total of building occupancy expenses, buying expenses, and
administrative expenses was $18,000 larger than the amount budgeted.
45 Minutes, Medium PROBLEM 23.8A
BRAEMAR SADDLERY
a. BRAEMAR SADDLERY
Performance Report for Custom Saddle Production Dept.
For the Year Ended December 31, 20__
Budgeted Costs Actual Over
for 6,000 Units Costs (or Under)
Per Unit Total Incurred Budget
Variable manufacturing
costs:
Direct materials 30.00$ 180,000$ 171,000$ (9,000)$
Direct labor 48.00 288,000 261,500 (26,500)
Indirect labor 15.00 90,000 95,500 5,500
b.
The revised performance report above shows that although actual costs exceeded the
SOLUTIONS TO PROBLEMS SET B
25 Minutes, Easy PROBLEM 23.1B
FROWREN DOMESTIC
a. Planned production of finished goods (in units):
Budgeted sales 200,000
Add: Finished goods inventory, end of quarter 25,000
c. Finished goods inventory at quarter-end (average cost):
Finished goods inventory, beginning of quarter 750,000$
Add: Cost of finished goods manufactured (part b) 5,070,000
20 Minutes, Medium PROBLEM 23.2B
HARLOW CORPORATION
a. Planned production of finished goods (in units):
Budgeted sales 300,000
Add: Finished goods inventory, Mar. 31 (end of quarter) 20,000
Units budgeted to be available for sale 320,000
*Using the first-in, first-out method, the ending
inventory consists of the most recently manufactured
units.
50 Minutes, Strong PROBLEM 23.3B
BARLEY, INC.
Cash balance at beginning of month 37,200$
Receipts:
Collections on receivables (Schedule A) 820,000$
Sale of fully depreciated equipment 9,000 829,000
Total cash available 866,200$
Payments:
Purchases
Computation of Purchases Units ($6 Per Unit)
Inventory at end of September (2,000 + 10% of 70,000) 9,000
Add: Purchases in October (70,000 + 11,000* – 9,000) 72,000 432,000$
Available for sale in October 81,000
Less: Sales in October 70,000
Inventory at end of October 11,000
†2,000 + 10% of 60,000 = 8,000 units
BARLEY, INCORPORATED
Cash Budget
For the Month Ended November 30th
40 Minutes, Strong PROBLEM 23.4B
PETER CORPORATION
a. Budgeted cash receipts for the quarter:
Collections on prior period receivables 250,000$
Collections on 70% of $700,000 sales 490,000
Total receipts collected during the quarter 740,000$
c. If beginning prepayments equal the ending prepayments
the amount expired during the period equals the
prepayments made during the period, or $18,000.
e. Given a minimum required cash balance of $10,000,
the company must attempt to obtain a loan of $15,000.
f. A bank will look for evidence that Peter has the ability