Problem 7-17B (30 minutes)
1.
September cash sales ……………………………………….
$ 9,500
September collections on account:
July sales: $21,000 × 21% ………………………………
4,410
August sales: $26,000 × 65% ………………………….
16,900
September sales: $37,000 × 10% ……………………..
3,700
Total cash collections ………………………………………..
$34,510
2.
Payments to suppliers:
August purchases (accounts payable) ………………..
$16,000
September purchases: $25,000 × 30% ………………
7,500
Total cash payments …………………………………………
$23,500
3.
Ojai Products
Cash Budget
For the Month of September
Cash balance, September 1 …………………………….
Add cash receipts:
Collections from customers …………………………..
Total cash available before current financing ………
Less disbursements:
Payments to suppliers for inventory ……………….
$23,500
Selling and administrative expenses ……………….
10,000
*
Equipment purchases ………………………………….
18,000
Dividends paid …………………………………………..
4,000
Total disbursements ……………………………………..
Excess (deficiency) of cash available over
disbursements …………………………………………..
Financing:
Borrowings ……………………………………………….
Repayments ……………………………………………..
Interest ……………………………………………………
Total financing …………………………………………….
Cash balance, September 30 …………………………..
Problem 7-18B (60 minutes)
1.
Collections on sales:
July
August
Sept.
Quarter
Cash sales …………………………
$ 7,200
$13,200
$12,800
$ 33,200
Credit sales:
May: $41,000 × 80% × 30%
9,840
9,840
June: $33,000 × 80% ×
50%, 30% …………………….
13,200
7,920
21,120
July: $36,000 × 80% × 20%,
50%, 30% …………………….
5,760
14,400
8,640
28,800
Aug.: $66,000 × 80% ×
20%, 50% …………………….
10,560
26,400
36,960
Sept.: $64,000 × 80% × 20%
…………………………………..
10,240
10,240
Total cash collections ……………
$36,000
$46,080
$58,080
$140,160
2. a. Merchandise purchases budget:
July
August
Sept.
Budgeted cost of goods sold ….
$21,000
$39,000
$27,000
Add desired ending inventory* .
25,350
17,550
15,600
Total needs ………………………..
46,350
56,550
42,600
Less beginning inventory ………
13,650
25,350
17,550
Required inventory purchases ..
$32,700
$31,200
$25,050
July
August
Sept.
Quarter
Accounts payable, June 30 …….
$12,100
$12,100
July purchases ……………………
16,350
$16,350
32,700
August purchases ………………..
15,600
$15,600
31,200
September purchases …………..
15,525
15,525
Total cash disbursements ………
$28,450
$31,950
$31,125
$91,525
Problem 7-18B (continued)
3.
Skolt Products, Inc.
Cash Budget
For the Quarter Ended September 30
July
August
Sept.
Quarter
Cash balance, beginning ……..
$ 3,000
$ 3,950
$ 3,780
$ 3,000
Add collections from sales
36,000
46,080
58,080
140,160
Total cash available ………….
39,000
50,030
61,860
143,160
Less disbursements:
For inventory purchases ……
28,450
31,950
31,125
91,525
For selling expenses …………
6,300
10,500
8,600
25,400
For administrative expenses
1,800
4,800
5,200
11,800
For land ………………………..
4,500
0
0
4,500
For dividends ………………….
0
0
1,600
1,600
Total disbursements …………..
41,050
47,250
46,525
134,825
Excess (deficiency) of cash
available over
disbursements ………………..
(2,050)
2,780
15,335
8,335
Financing:
Borrowings …………………….
6,000
1,000
7,000
Repayment …………………….
0
0
(7,000)
(7,000)
Interest* ……………………….
0
0
(200)
(200)
Total financing ………………….
6,000
1,000
(7,200)
(200)
Cash balance, ending …………
$ 3,950
$ 3,780
$ 8,135
$ 8,135
*
$6,000 × 1% × 3 =
$180
$1,000 × 1% × 2 =
20
$200
Problem 7-19B (60 minutes)
1.
Collections on sales:
July
August
Sept.
Quarter
Cash sales …………………………
$ 8,200
$14,200
$10,200
$ 32,600
Credit sales:
May: $26,000 × 80% × 20%
4,160
4,160
June: $32,000 × 80% ×
65%, 20% …………………….
16,640
5,120
21,760
July: $41,000 × 80% × 20%,
65%, 15% …………………….
8,200
18,040
6,560
32,800
August: $71,000 × 80% ×
15%, 65% …………………….
14,200
31,240
45,440
September: $51,000 × 80%
× 15% …………………………
10,200
10,200
Total cash collections ……………
$37,200
$51,560
$58,200
$146,960
2. a. Merchandise purchases budget:
July
August
Sept.
Budgeted cost of goods sold ….
$24,000
$41,000
$26,000
Add desired ending inventory* .
8,200
5,200
5,000
Total needs ………………………..
32,200
46,200
31,000
Less beginning inventory ………
4,800
8,200
5,200
Required inventory purchases ..
$27,400
$38,000
$25,800
July
August
Sept.
Quarter
Accounts payable, June 30 …….
$11,600
$11,600
July purchases ……………………
13,700
$13,700
27,400
August purchases ………………..
19,000
$19,000
38,000
September purchases …………..
12,900
12,900
Total cash disbursements ………
$25,300
$32,700
$31,900
$89,900
Problem 7-19B (continued)
3.
Skolt Products, Inc.
Cash Budget
For the Quarter Ended September 30
July
August
Sept.
Quarter
Cash balance, beginning ……..
$ 8,300
$ 8,600
$10,060
$ 8,300
Add collections from sales
37,200
51,560
58,200
146,960
Total cash available ………….
45,500
60,160
68,860
155,260
Less disbursements:
For inventory purchases ……
25,300
32,700
31,900
89,900
For selling expenses …………
7,100
11,700
8,600
27,400
For administrative expenses
3,400
5,100
4,000
12,500
For land ………………………..
4,100
0
0
4,100
For dividends ………………….
0
0
1,400
1,400
Total disbursements …………..
39,900
49,500
45,900
135,300
Excess (deficiency) of cash
available over
disbursements ………………..
5,600
10,660
22,960
19,960
Financing:
Borrowings …………………….
3,000
0
0
3,000
Repayment …………………….
0
0
(3,000)
(3,000)
Interest …………………………
0
0
90
90
Total financing ………………….
3,000
0
(3,090)
(90)
Cash balance, ending …………
$ 8,600
$10,660
$19,870
$ 19,870
4. Collecting accounts receivable sooner and reducing inventory levels
Problem 7-20B (60 minutes)
1. The sales budget for the third quarter:
July
Aug.
Sept.
Quarter
Budgeted sales (pairs) …..
5,600
6,600
4,600
16,800
Selling price per pair ……..
× $13
× $13
× $13
× $13
Total budgeted sales ……..
$72,800
$85,800
$59,800
$218,400
July
Aug.
Sept.
Quarter
Accounts receivable,
beginning balance ………
$130,000
$130,000
July sales:
$72,800 × 43%, 48% …
31,304
$34,944
66,248
August sales:
$85,800 × 43%, 48% …
36,894
$41,184
78,078
September sales:
$59,800 × 43% …………
25,714
25,714
Total cash collections …….
$161,304
$71,838
$66,898
$300,040
2. The production budget for July through October:
July
Aug.
Sept.
Oct.
Budgeted sales (pairs) ………………….
5,600
6,600
4,600
3,600
Add desired ending inventory …………
594
414
324
234
Total needs ………………………………..
6,194
7,014
4,924
3,834
Less beginning inventory……………….
504
594
414
324
Required production (pairs) ……………
5,690
6,420
4,510
3,510
Aug.
Sept.
Accounts payable, beginning
July purchases:
$58,360 × 60%, 40% ………..
35,016
$23,344
August purchases:
36,228
$24,152
September purchases:
$43,100 × 60% ………………..
25,860
Total cash disbursements ………
$46,816
$59,572
$50,012
Problem 7-20B (continued)
3. The direct materials budget for the third quarter:
July
Aug.
Sept.
Quarter
Required production—pairs
(above) ……………………….
5,690
6,420
4,510
16,620
Raw materials needs per
pair (lbs.) …………………….
× 4
× 4
× 4
× 4
Production needs (lbs.) ……..
22,760
25,680
18,040
66,480
Add desired ending
inventory ……………………..
5,136
3,608
2,808
*
2,808
Total needs …………………….
27,896
29,288
20,848
69,288
Less beginning inventory
4,552
5,136
3,608
4,552
Raw materials to be
purchased ……………………
23,344
24,152
17,240
64,736
Cost of raw materials to be
purchased at $2.50 per lb. .
$58,360
$60,380
$43,100
$161,840
Cash balance, beginning ………………………………
Add receipts from customers (above) ……………..
Total cash available ……………………………………..
250,850
Less disbursements:
Total cash disbursements ……………………………..
Excess of receipts over disbursements …………….
Financing:
Total financing ……………………………………………
Cash balance, ending …………………………………..
Problem 7-21B (60 minutes)
1. Schedule of cash receipts:
Cash sales—June ………………………………………..
$ 75,000
Collections on accounts receivable:
May 31 balance ……………………………………….
69,000
June (50% × 193,000) ………………………………
96,500
Total cash receipts ………………………………………
$240,500
Schedule of cash payments for purchases:
May 31 accounts payable balance …………………..
$ 82,800
June purchases (50% × 196,000) ………………….
98,000
Total cash payments ……………………………………
$180,800
Problem 7-21B (continued)
2.
Snapshot, Inc.
Budgeted Income Statement
For the Month of June
Sales ……………………………………………..
$268,000
Cost of goods sold:
Beginning inventory ………………………..
$ 34,500
Purchases …………………………………….
196,000
Goods available for sale …………………..
230,500
Ending inventory …………………………….
40,000
Cost of goods sold ………………………….
190,500
Gross margin …………………………………..
77,500
Selling and administrative expenses
($30,000 + $4,000) ………………………..
34,000
Net operating income ………………………..
43,500
Interest expense ………………………………
600
Net income ……………………………………..
$ 42,900
3.
Snapshot, Inc.
Budgeted Balance Sheet
June 30
Assets
Cash ……………………………………………………………..
$ 37,270
Accounts receivable (50% × 193,000) ………………….
96,500
Inventory ……………………………………………………….
40,000
Buildings and equipment, net of depreciation
($576,150 + $8,000 – $4,000) …………………………
580,150
Total assets …………………………..………………………..
$753,920
Liabilities and Stockholders’ Equity
Accounts payable (50% × $196,000) ……………………
$ 98,000
Note payable …………………………..………………………
21,000
Capital stock …………………………………………………..
509,220
Retained earnings ($82,800 + $42,900) ……………….
125,700
Total liabilities and equity …………………………………..
$753,920
Problem 7-22B (45 minutes)
1. Schedule of expected cash collections:
Month
July
August
September
Quarter
From accounts receivable:
May sales
$330,000 × 3% ………
$ 9,900
$ 9,900
June sales
$290,000 × 65% ……..
188,500
188,500
$290,000 × 3% ………
$ 8,700
8,700
From budgeted sales:
July sales
$330,000 × 20% ……..
66,000
66,000
$330,000 × 65% ……..
214,500
214,500
$330,000 × 3% ………
$ 9,900
9,900
August sales
$490,000 × 20% ……..
98,000
98,000
$490,000 × 65% ……..
318,500
318,500
September sales
$330,000 × 20% ……..
66,000
66,000
Total cash collections …….
$264,400
$321,200
$394,400
$980,000
Problem 7-22B (continued)
2. Cash budget:
Month
July
August
Sept.
Quarter
Cash balance, beginning …
$ 42,000
$ 3,400
$(12,400)
$ 42,000
Add receipts:
Collections from
customers ………………
264,400
321,200
394,400
980,000
Total cash available ……….
306,400
324,600
382,000
1,022,000
Less disbursements:
Merchandise purchases ..
166,000
161,000
151,000
478,000
Salaries and wages ……..
68,000
68,000
58,000
194,000
Advertising ………………..
70,000
80,000
90,000
240,000
Rent payments …………..
28,000
28,000
28,000
84,000
Equipment purchases ….
23,000
0
0
23,000
Total disbursements ………
355,000
337,000
327,000
1,019,000
Excess (deficiency) of
receipts over
disbursements ……………
(48,600)
(12,400)
55,000
3,000
Financing:
Borrowings ……………….
52,000
0
0
52,000
Repayments ………………
0
0
(52,000)
(52,000)
Interest ……………………
0
0
(1,900)
(1,900)
Total financing ……………..
52,000
0
(53,900)
(1,900)
Cash balance, ending …….
$ 3,400
$(12,400)
$ 1,100
$ 1,100
3. If the company needs a $20,000 minimum cash balance to start each
Problem 7-23B (45 minutes)
1. Schedule of expected cash collections:
Month
April
May
June
Quarter
From accounts receivable …………………………..
$127,500
$5,000
$132,500
From budgeted sales:
April sales
$206,000 × 19% …………………………..
39,140
39,140
$206,000 × 74% …………………………..
152,440
152,440
$206,000 × 4% …………………………..
$ 8,240
8,240
May sales
$316,000 × 19% …………………………..
60,040
60,040
$316,000 × 74% …………………………..
233,840
233,840
June sales
$346,000 × 19% …………………………..
0
0
65,740
65,740
Total cash collections …………………………..
$166,640
$217,480
$307,820
$691,940
Problem 7-23B (continued)
2. Cash budget:
Month
April
May
June
Quarter
Cash balance, beginning …………………………..
$ 29,000
$ 19,040
$ 20,520
$ 29,000
Add receipts:
Collections from
customers …………………………..
166,640
217,480
307,820
691,940
Total cash available …………………………..
195,640
236,520
328,340
720,940
Less disbursements:
Merchandise purchases …………………………..
108,200
119,500
169,500
397,200
Payroll …………………………..
9,000
9,000
8,000
26,000
Lease payments …………………………..
13,300
13,300
13,300
39,900
Advertising …………………………..
71,500
74,200
57,200
202,900
Equipment purchases …………………………..
8,600
0
0
8,600
Total disbursements …………………………..
210,600
216,000
248,000
674,600
Excess (deficiency) of
receipts over
disbursements …………………………..
(14,960)
20,520
80,340
46,340
Financing:
Borrowings …………………………..
34,000
0
0
34,000
Repayments …………………………..
0
0
(34,000)
(34,000)
Interest …………………………..
0
0
(820)
(820)
Total financing …………………………..
34,000
0
(34,820)
(820)
Cash balance, ending
$ 19,040
$ 20,520
$ 45,520
$ 45,520
3. If the company needs a $20,000 minimum cash balance to start each