Academic Learning had prepared the following sales budget, schedule of budgeted cash receipts, and cash budget for 2019:
Academic Learning |
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Sales Budget |
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For the Year Ended December 31, 2019 |
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First |
Second |
Third |
Fourth |
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Quarter |
Quarter |
Quarter |
Quarter |
Total |
|
Budgeted tablets to be sold |
550 |
350 |
1,600 |
500 |
3,000 |
Sales price per unit |
$550 |
$550 |
$550 |
$550 |
$550 |
Total sales |
$302,500 |
$192,500 |
$880,000 |
$275,000 |
$1,650,000 |
Schdule of Cash Receipts from Customers |
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First |
Second |
Third |
Fourth |
|||
Quarter |
Quarter |
Quarter |
Quarter |
Total |
||
Total sales |
$302,500 |
$192,500 |
$880,000 |
$275,000 |
$1,650,000 |
|
First |
Second |
Third |
Fourth |
|||
Quarter |
Quarter |
Quarter |
Quarter |
Total |
||
Cash Receipts from Customers: |
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Accounts Receivable balance, December 31, 2018 |
$22,000 |
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1st Qtr.—Cash sales (20%) |
60,500 |
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1st Qtr.—Credit sales (80%), 40% collected in 1st qtr. |
96,800 |
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1st Qtr.—Credit sales (80%), 60% collected in 2nd qtr. |
$145,200 |
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2nd Qtr.—Cash sales (20%) |
38,500 |
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2nd Qtr.—Credit sales (80%), 40% collected in 2nd qtr. |
61,600 |
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2nd Qtr.—Credit sales (80%), 60% collected in 3rd qtr. |
$92,400 |
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3rd Qtr.—Cash sales (20%) |
176,000 |
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3rd Qtr.—Credit sales (80%), 40% collected in 3rd qtr. |
281,600 |
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3rd Qtr.—Credit sales (80%), 60% collected in 4th qtr. |
$422,400 |
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4th Qtr.—Cash sales (20%) |
55,000 |
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4th Qtr.—Credit sales (80%), 40% collected in 4th qtr. |
88,000 |
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Total cash receipts from customers |
$179,300 |
$245,300 |
$550,000 |
$565,400 |
$1,540,000 |
|
Accounts Receivable balance, December 31, 2019: |
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4th Qtr.—Credit sales (80%), 60% collected in 1st qtr of 2020 |
$132,000 |
Academic Learning |
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Cash Budget |
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For the Year Ended December 31, 2019 |
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First |
Second |
Third |
Fourth |
|||
Quarter |
Quarter |
Quarter |
Quarter |
Total |
||
Beginning cash balance |
$38,000 |
$35,575 |
$35,680 |
$35,525 |
$38,000 |
|
Cash receipts |
179,300 |
245,300 |
550,000 |
565,400 |
1,540,000 |
|
Cash available |
217,300 |
280,875 |
585,680 |
600,925 |
1,578,000 |
|
Cash payments: |
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Capital expenditures |
40,000 |
40,000 |
40,000 |
40,000 |
160,000 |
|
Purchases of direct materials |
33,280 |
146,880 |
172,440 |
139,320 |
491,920 |
|
Direct labor |
14,080 |
38,400 |
88,320 |
33,280 |
174,080 |
|
Manufacturing overhead |
97,640 |
100,300 |
105,760 |
99,740 |
403,440 |
|
Selling and administrative expenses |
59,725 |
58,625 |
65,500 |
59,450 |
243,300 |
|
Income taxes |
3,000 |
3,000 |
3,000 |
3,000 |
12,000 |
|
Interest expense |
0 |
990 |
3,135 |
2,055 |
6,180 |
|
Total cash payments |
247,725 |
388,195 |
478,155 |
376,845 |
1,490,920 |
|
Ending cash balance before financing |
(30,425) |
(107,320) |
107,525 |
224,080 |
87,080 |
|
Minimum cash balance desired |
(35,000) |
(35,000) |
(35,000) |
(35,000) |
(35,000) |
|
Projected cash excess (deciency) |
(65,425) |
(142,320) |
72,525 |
189,080 |
52,080 |
|
Financing: |
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Borrowing |
66,000 |
143,000 |
0 |
0 |
209,000 |
|
Principal repayments |
0 |
0 |
(72,000) |
(137,000) |
(209,000) |
|
Total effects of financing |
66,000 |
143,000 |
(72,000) |
(137,000) |
0 |
|
Ending cash balance |
$35,575 |
$35,680 |
$35,525 |
$87,080 |
87,080 |
Academic Learning decided to revise its sales budget to show fourth quarter sales of 650 tablets due to the expectation of increased holiday sales.
Suppose a change in the receipt of cash from sales on account is as follows:
Requirement 1. Revise the schedule of budgeted cash receipts to include the increase in fourth quarter sales and the change in the timing of customer receipts. (If a box is not used in the table, leave the box empty; do not enter a zero. Round your answers to the nearest dollar.)
Requirement 2. How will the changes in cash receipts affect the cash budget?
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Sales Budget: | |||||||
First | Second | Third | Fourth | ||||
Quarter | Quarter | Quarter | Quarter | Total | |||
Budgeted tablets to be sold | 550 | 350 | 1,600 | 650 | 3,150 | ||
Sales price per unit | $ 550 | $ 550 | $ 550 | $ 550 | $ 550 | ||
Total sales | $ 302,500 | $ 192,500 | $ 880,000 | $ 357,500 | $ 1,732,500 | ||
Schdule of Cash Receipts from Customers: | |||||||
80% | First | Second | Third | Fourth | |||
Quarter | Quarter | Quarter | Quarter | Total | |||
Total sales | $ 302,500 | $ 192,500 | $ 880,000 | $ 357,500 | $ 1,732,500 | ||
Cash Receipts from Customers: | |||||||
Accounts Receivable balance, December 31, 2018 | $ 22,000 | $ 22,000 | |||||
1st Qtr.—Cash sales (20%) | 20% | $ 60,500 | $ 60,500 | ||||
1st Qtr.—Credit sales (80%), 40% collected in 1st qtr. | 40% | $ 96,800 | $ 96,800 | ||||
1st Qtr.—Credit sales (80%), 20% collected in 2nd qtr. | 30% | $ 72,600 | $ 72,600 | ||||
1st Qtr.—Credit sales (80%), 28% collected in 3rd qtr. | 28% | $ 67,760 | $ 67,760 | ||||
2nd Qtr.—Cash sales (20%) | 20% | $ 38,500 | $ 38,500 | ||||
2nd Qtr.—Credit sales (80%), 40% collected in 2nd qtr. | 40% | $ 61,600 | $ 61,600 | ||||
2nd Qtr.—Credit sales (80%), 30% collected in 3rd qtr. | 30% | $ 46,200 | $ 46,200 | ||||
2nd Qtr.—Credit sales (80%), 28% collected in 4th qtr. | 28% | $ 43,120 | $ 43,120 | ||||
3rd Qtr.—Cash sales (20%) | 20% | $ 176,000 | $ 176,000 | ||||
3rd Qtr.—Credit sales (80%), 40% collected in 3rd qtr. | 40% | $ 281,600 | $ 281,600 | ||||
3rd Qtr.—Credit sales (80%), 30% collected in 4th qtr. | 30% | $ 211,200 | $ 211,200 | ||||
4th Qtr.—Cash sales (20%) | 20% | $ 71,500 | $ 71,500 | ||||
4th Qtr.—Credit sales (80%), 40% collected in 4th qtr. | 40% | $ 114,400 | $ 114,400 | ||||
Total cash receipts from customers | $ 179,300 | $ 172,700 | $ 571,560 | $ 440,220 | $ 1,363,780 | ||
First | Second | Third | Fourth | ||||
Quarter | Quarter | Quarter | Quarter | Total | |||
Beginning cash balance | $ 38,000 | $ 35,575 | $ 35,080 | $ 35,485 | $ 38,000 | ||
Cash receipts | $ 179,300 | $ 172,700 | $ 571,560 | $ 440,220 | $ 1,363,780 | ||
Cash available | $ 217,300 | $ 208,275 | $ 606,640 | $ 475,705 | $ 1,401,780 | ||
Cash payments: | |||||||
Capital expenditures | $ 40,000 | $ 40,000 | $ 40,000 | $ 40,000 | $ 160,000 | ||
Purchases of direct materials | $ 33,280 | $ 146,880 | $ 172,440 | $ 139,320 | $ 491,920 | ||
Direct labor | $ 14,080 | $ 38,400 | $ 88,320 | $ 33,280 | $ 174,080 | ||
Manufacturing overhead | $ 97,640 | $ 100,300 | $ 105,760 | $ 99,740 | $ 403,440 | ||
Selling and administrative expenses | $ 59,725 | $ 58,625 | $ 65,500 | $ 59,450 | $ 243,300 | ||
Income taxes | $ 3,000 | $ 3,000 | $ 3,000 | $ 3,000 | $ 12,000 | ||
Interest expense | $ - | $ 990 | $ 3,135 | $ 2,055 | $ 6,180 | ||
Total cash payments | $ 247,725 | $ 388,195 | $ 478,155 | $ 376,845 | $ 1,490,920 | ||
Ending cash balance before financing | $ (30,425) | $ (179,920) | $ 128,485 | $ 98,860 | $ (89,140) | ||
Minimum cash balance desired | $ (35,000) | $ (35,000) | $ (35,000) | $ (35,000) | $ (35,000) | ||
Projected cash excess (deciency) | $ (65,425) | $ (214,920) | $ 93,485 | $ 63,860 | $ (124,140) | ||
Financing: | |||||||
Borrowing | $ 66,000 | $ 215,000 | $ - | $ - | $ 281,000 | ||
Principal repayments | $ - | $ - | $ 93,000 | $ 63,000 | $ (156,000) | ||
Total effects of financing | $ 66,000 | $ 215,000 | $ 93,000 | $ 63,000 | $ 125,000 | ||
Ending cash balance | $ 35,575 | $ 35,080 | $ 35,485 | $ 35,860 | $ 35,860 | ||
Part 2 | |||||||
This will be negative impact on cash flow as loan taken will be outstnading at the end of quarter | |||||||
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