Janus Products, Inc. is a merchandising company that sells binders, paper, and o
ID: 2414232 • Letter: J
Question
Janus Products, Inc. is a merchandising company that sells binders, paper, and other school supplies. The company is planning its cash needs for the third quarter. In the past, Janus Products has had to borrow money during the third quarter to support peak sales of back-to-school materials, which occur during August. The following information has been assembled to assist in preparing a cash budget for the quarter:
Janus Products, Inc. is a merchandising company that sells binders, paper, and other school supplies. The company is planning its cash needs for the third quarter. In the past, Janus Products has had to borrow money during the third quarter to support peak sales of back-to-school materials, which occur during August. The following information has been assembled to assist in preparing a cash budget for the quarter:
Janus Products, Inc. is a merchandising company that sells binders, paper, and other school supplies. The company is planning its cash needs for the third quarter. In the past, Janus Products has had to borrow money during the third quarter to support peak sales of back-to-school materials, which occur during August. The following information has been assembled to assist in preparing a cash budget for the quarter: a. Budgeted monthly absorption costing income statements for July to October are as follows AugustSeptember October $56,000 32,400 Sales $46,000 26,400 $76,000 44 400 $51 000 29,400 Cost of goods sold Gross margin Selling and administrative expenses 19,600 31 ,600 23,600 21,600 Selling expense Administrative expense 7 900 9,000 5,950 12,900 9,100 6,700 7800 20,700 4,650 %10,900 7,800 6,500 14,400 7200 Total selling and administrative expenses 14,950 15,800 Net operating income "Includes $2300 depreciation each month b. Sales are 20% for cash and 80% on credit C. Credit sales are collected over a three-month period, with 10% collected in the month of sale, 70% in the month following sale, and 20% in the second month following sale. May sales totalled $36,000, and June sales totalled $42,000 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% are paid in the following month. Accounts payable for inventory purchases at June 30 total $14,700 e. The company maintains its ending inventory levels at 75% of the cost of the merchandise to be sold in the following month. The merchandise inventory at June 30 is $21,000 f Land costing $4 800 will be purchased in July g. Dividnds of $1 ,300 will be declared and paid in September h. The cash balance on June 30 is $8,500; the company must maintain a cash balance of at least this amount at the end of each month i. The company has an agreement with a local bank that allows it to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $40,000. 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 July, August, and September and for the quarter in tota JANUS PRODUCTS, INC Schedule of Expected Cash Collections August September uarter Cash sales $ 9,200 1520011200 35 600 Credit sales 7 200Explanation / Answer
Answer 1. Sales Budget Jul Aug Sep Quarter Oct. May June Sales 46,000 76,000 56,000 178,000 51,000 36,000 42,000 Cash Sales - 20% of Sales 9,200 15,200 11,200 35,600 10,200 7,200 8,400 Credit Sales - 80% of Sales 36,800 60,800 44,800 142,400 40,800 28,800 33,600 JANUS PRODUCTS INC Schedule of Expected Cash Collections Jul Aug Sep Quarter Cash Sales 9,200 15,200 11,200 35,600 Credit Sales: May 5,760 5,760 June 23,520 6,720 - 30,240 Jul 3,680 25,760 7,360 36,800 Aug 6,080 42,560 48,640 Sep 4,480 4,480 Total cash Collections 42,160 53,760 65,600 161,520 Answer 2-a. JANUS PRODUCTS INC Merchandise Purchase Budget Jul Aug Sep Quarter Oct Budgeted Cost of Goods Sold 26,400 44,400 32,400 103,200 29,400 Add: Desired Ending Inventory 33,300 24,300 22,050 22,050 Total Needs 59,700 68,700 54,450 125,250 Less: Beginning Inventory (21,000) (33,300) (24,300) (21,000) Required Inventory Purchases 38,700 35,400 30,150 104,250 Answer 2-b. JANUS PRODUCTS INC Schedule of Expected Cash Disbursements Jul Aug Sep Quarter Cash Payment Accounts Payable - June 30 14,700 14,700 Jul Purchases 19,350 19,350 38,700 Aug Purchases 17,700 17,700 35,400 Sep Purchases 15,075 15,075 Total Cash Payment to Suppliers 34,050 37,050 32,775 103,875 Answer 3. Cash budget Jul Aug Sep Quarter Cash Balance, beginning 8,600 9,260 9,570 8,600 Add: Collection from Sales 42,160 53,760 65,600 161,520 Total Cash available 50,760 63,020 75,170 170,120 Less: Disbursements Inventory Purchases 34,050 37,050 32,775 103,875 Land 4,800 - - 4,800 Dividends - - 1,300 1,300 Selling Expenses 9,000 12,900 9,100 31,000 Administrative Expenses 3,650 5,500 4,400 13,550 Total Disbursement 51,500 55,450 47,575 154,525 Excess (Deficiency) of Cash available over disbursements (740) 7,570 27,595 15,595 Financing: Borrowings 10,000 2,000 12,000 Repayments - - (12,000) (12,000) Interest - - (340) (340) Total Financing 10,000 2,000 (12,340) (340) Cash Balance, Ending 9,260 9,570 15,255 15,255
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.