5) ABC Company pays for raw material purchases as follows: 75% in the month of purchase;...
5)
ABC Company pays for raw material purchases as follows:
75% in the month of purchase; 25% in the subsequent month.
Budgeted purchases are as follows: June = $56,000; July =
$60,000.
Budgeted cash payment to be made in the month of
July is $ ?
-------
6)
ABC Company pays for raw material purchases as follows:
75% in the month of purchase; 25% in the subsequent month.
Budgeted purchases are as follows: June = $56,000; July =
$60,000.
Cash disbursement forecast for the purchases
budgeted for the month of June will be anticipated as
follows:
June = $ ? July = $
?
-------
7)
ABC Company has identified the following information related to its
cash budget for October:
Beginning cash balance = $20,000; Cash receipts from sales =
$100,000; Cash payments for purchases = $50,000;
Proceeds from borrowings = $25,000; Payments for other
manufacturing expenses = $40,000;
Payments for operating expenses = $35,000; Dividend payment =
$10,000;
Ending cash balance = $ ?
----
8)
ABC Company requires a minimum cash balance of $15,000 at the end
of each month and has identified the following information related
to its cash budget for October:
Beginning cash balance = $20,000; Cash receipts = $125,000; Cash
disbursements = $135,000;
Required short-term borrowing = $ ?
Ending cash balance = $ ?
Homework Answers
Answer-5)- Budgeted cash payment to be made in the month of July is = $59000.
Explanation- Budgeted cash payment to be made in the month of July = June month purchase payment+ July month purchase payment
= ($56000*25%)+($60000*75%)
= $14000+$45000
= $59000
6)- Cash disbursement forecast for the purchases budgeted for the month of June will be anticipated-
June= $56000*75% =$42000
July = ($56000*25%)+($60000*75%)
= $14000+$45000
= $59000
7)- Ending cash balance = $10000.
Explanation-Ending cash balance=(Beginning cash balance+ Cash receipts from sales + Proceeds from borrowings)- Cash payments for purchases-Payments for other manufacturing expenses-Payments for operating expenses-Dividend payment
= ($20000+$100000+$25000)-$50000-$40000-$35000-$10000
= $10000
8)- Required short-term borrowing=$5000.
Ending cash balance = $15000.
Explanation- Required short-term borrowing =(Ending minimum cash balance +Cash disbursements)- (Beginning cash balance + Cash receipts)
= ($15000+$135000)-($20000+$125000)
= $150000-$145000
= $5000
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