Question

April May June July $ 500,000 $700,000 $400,000 $300,000 350,000 490,000 280,000 210,000 150,000 210,000 120,000 90,000 Sales Coat of goods sold Gross margin Selling and administrative expenses: Selling expense Administrative expense* Total selling and administrative expenses Net operating income 70,000 90,000 51,000 30,000 40,000 52, 800 32,000 28.000 110,000 142,800 83,000 58,000 $ 40,000 $ 67,200 $ $7,000 $32,000 "Includes $12,000 of depreciation each month. b. Sales are 20% for cash and 80% on account. c. Sales on account are collected over a three-month period with 10% collected in the month of sale: 80% collected in the first month following the month of sale; and the remaining 10% collected in the second month following the month of sale. February's sales totaled $140,000, and March's sales totaled $200,000 d. Inventory purchases are paid for within 15 days. Therefore, 50% of a month's inventory purchases are paid for in the month of purchase. The remaining 50% is paid in the following month. Accounts payable at March 31 for inventory purchases during March total $91,000. e. Each month's ending inventory must equal 20% of the cost of the merchandise to be sold in the following month. The merchandise inventory at March 31 is $70,000. f. Dividends of $20,000 will be declared and paid in April. g. Land costing $28,000 will be purchased for cash in May. h. The cash balance at March 31 is $42,000; the company must maintain a cash balance of at least $40.000 at the end of each month 1. The company has an agreement with a local bank that allows the company to borrow in increments of $1.000 at the beginning of each month, up to a total loan balance of $200,000. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter. Required: 1. Prepare a schedule of expected cash collections for April, May, and June, and for the quarter in total. 2. Prepare the following for merchandise inventory: a. A merchandise purchases budget for April, May, and June. b. A schedule of expected cash disbursements for merchandise purchases for April, May, and June, and for the quarter in total 3. Prepare a cash budget for April, May, and June as well as in total for the quarter.

Answer 1

Particular Schedule of Expeded Cash collection April May June Total 100000 140000 Bopoo 3200 00 LS 00000K202 C100004) (900602 Cash Sales 199200 39000 52000 1081200 Collection prom Idebtor (W.Ni Total 279200 532000 COOOOD 141200 4 ABDOSRI @ Credit Sales for the Month of wezi bata o Apart 5000do -|Dopoo - 400000 : 700000 -140000 = 560000 June = 40000 -80,000 32000 May

OR 357) 02 JANUARY 08 TUESDAY 10.1.) lab Statement showing Collection from debtou Particular showing April May Tune Total Gece Sale Collection Marth 1/200 February [il2000 RIOON * DONO March 144000 [166000 KS (16conxlay olxL) 0000ST April 40000 320000 40.000 400002 LOODBOX (6) Gomix & 4009 Klos 11200 COM 128000 16000 May 56000 448000 504000 1560000 x16 (56000X80 June 32000 32000 B20000K loc) 179200 392000 520000 1091200 Total * February's Gudit Sales - $140000 x SUY. $112.000 March's Credit Salu = $200000 80% $160000 M T W T F S S M T W T F S S M T W T F S S M T W T F S S M T W 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 DEC-2018