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x' A··A-.. 5- ca .- |Normal|TNo Spac." ng 2 Title Subtitle Subtle Em... Emphasis In Heading 1 Heading 2 Title Subtitle Subtle En. Emphasis in of shah Current assets as of March 31: $ B,700 24, 800 $ 46,800 Building and equipment, net$116,400 $ 28, 050 $150,000 $ 18, 650 Accounts receivable Inventory Common stock Retained earnings b. Actual and budgeted sales data: May June July $ 78,000 $ 83,000 $108,000 s 59,000 e sales are 60% for cash and 40% on credit. Credit sales are collected in the month following sale. The d. Each month's ending inventory should equal 80% of the following month's budgeted cost of goods e. One-half of a month's inventory purchases is paid for in the month of purchase; the other half is paid accounts receivable at March 31 are a result of March credit sales sold. for in the following month. The accounts payable at March 31 are the result of March p s of invento f. Monthly expenses are as follows: com 12% of sales; rent, $3,500 per month; other expenses $873 per month (includes depreciation on new assets). & Equipment costing $2,700 will be purchased for cash in April. Management would like to maintain a minimum cash balance of at least $4,000 at the end of each month. The company has an agreement with a local bank that allows the company to borrow in h. s of $1,000 at the beginning of each month, up to a total loan balance of $20,000. 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 quarterExplanation / Answer
Schedule of Cash Collections for the quarter April - June April May June sales $78,000 $83,000 $1,08,000 Cash Sales (60%) (a) $46,800 $49,800 $64,800 Credit Sales $31,200 $33,200 $43,200 Collection from Credit Sales (b) $24,800 $31,200 $33,200 Total Cash Collections (a+b) $71,600 $81,000 $98,000 Statement showing Budgeted Purchase April May June July Sales $78,000 $83,000 $1,08,000 $59,000 Cost of Goods Sold @ 75% (Gross Margin is 25%) $58,500 $62,250 $81,000 $44,250 Closing Inventory $49,800 $64,800 $35,400 Less: Opening Inventory $46,800 $49,800 $64,800 Inventory Purchases $61,500 $77,250 $51,600 Statement Showing cash payment made April May June Purchase payment for Last Month $28,050 $30,750 $38,625 For Current Month Purchase $30,750 $38,625 $25,800 Other Expense @ 6% on sales $4,680 $4,980 $6,480 Rent $3,500 $3,500 $3,500 Comission @ 12% on Sales $9,360 $9,960 $12,960 Equipment Purchase $2,700 Total Cash Disbursements $79,040 $87,815 $87,365 3. Cash Budget for the quarter ended June 30 April May June Opening Cash Balance $8,700 $4,260 $4,445 Cash Collections $71,600 $81,000 $98,000 Line of Credit - Loan obtained $3,000 $7,000 $0 $83,300 $92,260 $1,02,445 Cash Disbursements -$79,040 -$87,815 -$87,365 Line of Credit - Loan repaid -$10,000 Interest on Loan for 2 months -$130 Closing Cash Balance $4,260 $4,445 $4,950 4. Absorption Costing Income Statement as on June 30 Sales $2,69,000 Cost of Goods Sold @ 75% of Sales $2,01,750 Gross Margin $67,250 Commission $32,280 Rentals $10,500 Other Expenses $16,140 Interest on Loan repaid $130 Depreciation $2,619 $61,669 Transfer to Retained Earnings $5,581 5. Balance Sheet as on June 30 Assets Current Assets Cash $4,950 Accounts Receivable $43,200 Inventory $35,400 Total Current Assets $83,550 Building and Equipment (Net) $1,16,481 Total Assets $2,00,031 Liabilities and Equity Current Liabilities Accounts Payable $25,800 Equity Capital Stock $1,50,000 Retained Earnings (net of loss) (18650+5581) $24,231 Total Liabilities and Equity $2,00,031
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