P4-12 Cash budget: Advanced The Green PLC has projected following unit sales for Janu-ary 2019 to August 2019. The sales of Green PLC are 30% in cash and the remain-der is on a credit for 1 month, It also expects cash receipts from its subsidiariesworth £40,000 in March, £26,000 in April, and £27,000 in June.The firm pays 20% in cash for all its purchases. The remaining 40% is paid inthe following month and the last 40% is paid 2 months later.MonthSalesPurchasesJanuaryFebruary600,00040,000500,000350,000March600,000450,000April500,000700,000800,000475,000MayJune300,000450,000JulyAugust750,000s00,000300,000350,000Wages and salaries amount to 25% of the sales in the preceding month. Theyalso need to pay rent of £15,000 every month. The payment for a new machinerywill be due in March for £45,000 and will be paid in cash. They have to pay interimtax of £45,000 in May.The firm also expects to pay dividend of £26,000 in March and receive a cashsubsidy of £37,000 from government in June.a. Assuming that the firm has a cash balance of £32,000 at the beginning of January,estimate the end-of-month closing cash halances for each month, March to August.b. The directors decide that the cash balance should be maintained ar £20,000 atany given point of time. Determine the required total financing or excess cashbalance for each month, March to August.c. Do you think that Green PLC will need an overdraft facility for the period fromMarch to August? What overdraft limit should they ask for while requesting a lineof credit from banks?

Cash budget is an accounting format that helps to plan the cash requirement of the company on…

rojected following for Ja ary 2019 to August 2019. The sales of Green PLC are 30% in cash and the remai der is on a credit for 1 month, It also expects cash receipts from its subsidiaries worth £40,000 in March, £26,000 in April, and £27,000 in June. The firm pays 20% in cash for all its purchases. The remaining 40% is paid i the following month and the last 40% is paid 2 months later. Month Sales Purchases January February March 600,000 400,000 s00,000 600,000 500,000 700,000 s00,000 350,000 450,000 April May 475,000 300,000 450,000 June July August 750,000 s00,000 300,000 350,000 Wages and salaries amount to 25% of the sales in the preceding month. They so need to pay rent of £15,000 every month. The payment for a new machinery ill be due in March for £45,000 and will be paid in cash. They have to pay interin xof £45,000 in May. The firm also expects to pay dividend of £26,000 in March and receive a cash bsidy of £37,000 from government in June. Assuming that the firm has a cash balance of £32,000 at the beginning of January

rojected following for Ja ary 2019 to August 2019. The sales of Green PLC are 30% in cash and the remai der is on a credit for 1 month, It also expects cash receipts from its subsidiaries worth £40,000 in March, £26,000 in April, and £27,000 in June. The firm pays 20% in cash for all its purchases. The remaining 40% is paid i the following month and the last 40% is paid 2 months later. Month Sales Purchases January February March 600,000 400,000 s00,000 600,000 500,000 700,000 s00,000 350,000 450,000 April May 475,000 300,000 450,000 June July August 750,000 s00,000 300,000 350,000 Wages and salaries amount to 25% of the sales in the preceding month. They so need to pay rent of £15,000 every month. The payment for a new machinery ill be due in March for £45,000 and will be paid in cash. They have to pay interin xof £45,000 in May. The firm also expects to pay dividend of £26,000 in March and receive a cash bsidy of £37,000 from government in June. Assuming that the firm has a cash balance of £32,000 at the beginning of January

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter8: Budgeting For Planning And Control

Section: Chapter Questions

Problem 34E: A companys sales for the coming months are as follows: About 20 percent of sales are cash sales, and...

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Cash budget The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information: The company expects to sell about 10% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month following the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent 50,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in January, and the annual property taxes are paid in December. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month. Current assets as of September 1 include cash of 40,000, marketable securities of 75,000, and accounts receivable of 300,000 (60,000 from July sales and 240,000 from August sales). Sales on account for July and August were 200,000 and 240,000, respectively. Current liabilities as of September 1 include 40,000 of accounts payable incurred in August for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of 55,000 will be made in October. Bridgeports regular quarterly dividend of 25,000 is expected to be declared in October and paid in November. Management desires to maintain a minimum cash balance of 50,000. Instructions Prepare a monthly cash budget and supporting schedules for September, October, and November. On the basis of the cash budget prepared in part (1), what recommendation should be made to the controller?
Barnstormer sells airplane accessories for $20 each. It expects sales of 120,000 units in quarter 1 and a 7% increase each subsequent quarter for the next 8 quarters. Prepare a sales budget by quarter for the first year.
Cash budget The controller of Mercury Shoes Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information: The company expects to sell about 10% of its merchandise for cash. Of sales on account, 60% are expected to be collected in the month following the sale and the remainder the following month (second month after sale). Depreciation, insurance, and property tax expense represent 12,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in February, and the annual property taxes are paid in November. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month. Current assets as of June 1 include cash of 42,000, marketable securities of 25,000, and accounts receivable of 198,000 (150,000 from May sales and 48,000 from April sales). Sales on account in April and May were 120,000 and 150,000, respectively. Current liabilities as of June 1 include 13,000 of accounts payable incurred in May for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of 24,000 will be made in July. Mercury Shoes regular quarterly dividend of 15,000 is expected to be declared in July and paid in August. Management desires to maintain a minimum cash balance of 40,000. Instructions Prepare a monthly cash budget and supporting schedules for June, July, and August. On the basis of the cash budget prepared in part (1), what recommendation should be made to the controller?
CASH BUDGETING Helen Bowers, owner of Helens Fashion Designs, is planning to request a line of credit from her bank. She has estimated the following sales forecasts for the firm for parts of 2019 and 2020: Estimates regarding payments obtained from the credit department are as follows: collected within the month of sale, 10%; collected the month following the sale, 75%; collected the second month following the sale, 15%. Payments for labor and raw materials are made the month after these services were provided. Here are the estimated costs of labor plus raw materials: General and administrative salaries are approximately 27,000 a month. Lease payments under long-term leases are 9,000 a month. Depreciation charges are 36,000 a month. Miscellaneous expenses are 2,700 a month. Income tax payments of 63,000 are due in September and December. A progress payment of 180,000 on a new design studio must be paid in October. Cash on hand on July 1 will be 132,000, and a minimum cash balance of 90,000 should be maintained throughout the cash budget period. a. Prepare a monthly cash budget for the last 6 months of 2019. b. Prepare monthly estimates of the required financing or excess fundsthat is, the amount of money Bowers will need to borrow or will have available to invest. c. Now suppose receipts from sales come in uniformly during the month (that is, cash receipts come in at the rate of 1/30 each day), but all outflows must be paid on the 5th. Will this affect the cash budget? That is, will the cash budget you prepared be valid under these assumptions? If not, what could be done to make a valid estimate of the peak financing requirements? No calculations are required, although if you prefer, you can use calculations to illustrate the effects. d. Bowers sales are seasonal, and her company produces on a seasonal basis, just ahead of sales. Without making any calculations, discuss how the companys current and debt ratios would vary during the year if all financial requirements were met with short-term bank loans. Could changes in these ratios affect the firms ability to obtain bank credit? Explain.
Navigator sells GPS trackers for $50 each. It expects sales of 5,000 units in quarter 1 and a 5% increase each subsequent quarter for the next 8 quarters. Prepare a sales budget by quarter for the first year.
QUESTION 1You are required to prepare a cash budget for the third quarter of 2020 for STS Corporation.Month Total sales(RM)March 170,000April 100,000May 140,000June 180,000July 200,000AugustSeptemberOctober220,000195,000180,000i) The company makes 10 percent cash sales, and the balance are collected as follows; 60percent is collected one month after sales, 30 percent is collected two months after sales,and 10 percent is collected three months after sales.ii) Purchase of raw materials is 50 percent of sales and are made one month prior to sales.Payment are made equally in the two months after the purchases.iii) Wages and salaries amounting to 10 percent of the last month’s sales. The company fixedmonthly expenses are RM3,000 for rent, RM2,000 for utilities, RM10,000 for depreciation,and RM1,500 for insurance.iv) A quarterly dividend of RM50,000 will be paid at the end of each quarter.v) The company plans to pay RM70,500 in cash for a new machinery installed in August.vi) Ending cash…
REQUIRED Use the information provided below to prepare the Pro-Forma Statement of Comprehensive Income for July and August 2021 (using separate monetary columns for each month). INFORMATION The budgeted Statement of Comprehensive Income of Ryobi Enterprises for the year ended 30 June 2021 is as follows: Sales 3 000 000 Cost of sales (2 000 000) Gross profit 1 000 000 Rent income 108 000 1 108 000 Operating expenses (720 000) Salaries 360 000 Advertising 120 000 Bad debts 60 000 Depreciation Other operating expenses Operating profit Interest expense 30 000 150 000 388 000 (38 000) Net profit 350 000
A. SALES AND PRODUCTION BUDGET (1 Rak Sarang Corporation expects to sell 5,000 units in the first year, followed by a 300-unit increment in subsequent quarters. The company believes that by retaining an ending inventory equivalent to 15% of the next quarter's anticipated sales volume, it can satisfy future sales requirements. Based on a sales price of P150 per unit: a. Prepare the Sales Budget (For the year 2022). b. Prepare the Production Budget (For the year 2022).
Shalom Company prepared the following sales budget for the first two quarters of 2023: January March April 10,000 11,000 15,000 February 14,000 May 18,000 June 20,000 Unit sales Shalom Company sells the product at P15 per unit. 20% of sales is cash, and the balance is on credit. The company estimates that collection of sales on account will be 60% in the month of sales with the remainder in the following month. On December 31, 2022, accounts receivable was P60,000. Amounts must be in whole numbers. Example: 88,000 or (88,000) What is the balance of accounts receivable at the end of May?
Shalom Company prepared the following sales budget for the first two quarters of 2023: January February March April 10,000 14,000 11,000 15,000 May 18,000 June 20,000 Unit sales Shalom Company sells the product at P15 per unit. 20% of sales is cash, and the balance is on credit. The company estimates that collection of sales on account will be 60% in the month of sales with the remainder in the following month. On December 31, 2022, accounts receivable was P60,000. Amounts must be in whole numbers. Example: 88,000 or (88,000) What are the total expected cash receipts at the end of the first quarter?
Case study #3 Hussain Traders LLC is providing the following information. You are required to prepare Cash Budget for the period of 6 months from July to December 2020. All amounts in Rials. Month July August Sales Rent 120,000 6,000 4,000 140,000 7,000 5,000 September 110,000 6,000 7,000 October 130,000 4,000 3,000 November 120,000 6,000 4,000 December 150,000 8,000 5,000 Marketing Expenses Additional information: Salaries 8,000 4,000 5,000 4,000 6,000 7,000 a) Cash sales 50% and the balance in the following month b) Commission received RO 20,000 in the month of November. c) Sale of Fixed Assets in the month of December for RO 5,000 d) Purchase of Printing Machine in September RO 50,000 e) Interest payment to bank RO 40,000 in the month of October f) All other expenses are paid on the 1st of next month. g) Opening Balance for the month of July is RO 50000. Administrative Expenses 1,000 2,000 4,000 3,000 7,000 5,000
A company has the following budgeted sales in each quarter of the year 2024: Expected Sales Q1 Q2 Q3 Q4 Cash collection information is as follows: $240,000 $280,000 $300,000 $420,000 1. Of all sales, 70% are on credit REMBRA 2. 60% of credit sales are collected in the quarter in which the sale is made; 30% are collected in the following quarter, and 10% are collected in the second quarter after the sale. 3. Accounts Receivable is estimated to be $63,000 on December 31,2023. The company expects to collect all outstanding receivabl in the first quarter of 2024. Q. What is the total cash collection for the second quarter of 2024? Answer. (Click to select) (Click to select) None of the answers are correct $231,000 $168,000 $252,000 $315,000