ACCOUNTING

QUESTION 10

1.Fulkron Inc. provides the following data taken from its third quarter budget:

Jul Aug Sep

Cash collections $66,000 $42,000 $45,000

Cash payments:

Purchases of inventory 50,000 48,000 25,000

Operating expenses 10,000 15,000 20,000

Capital expenditures 0 32,000 6,000

 

 

The cash balance on June 30 is projected to be $10,000. Based on the above data, calculate the shortfall the company is projected to have at the end of September.

$43,000

$28,000

$40,000

$35,000

1 points

QUESTION 11

1.Which of the following is true of the sales budget?

It captures the variable and fixed expenses of the business.

It is used in the production budget.

It shows the value of expected production in a period.

It provides sales values that are used to prepare financial statements for external reporting purposes.

1 points

QUESTION 12

1.Which of the following describes the production budget?

 

It gives the quantity of finished goods to be manufactured during a budget period.

It depicts the breakdown of sales on the basis of terms and conditions of collection of sales revenue.

It helps in planning to ensure the business has adequate cash.

It aids in planning to ensure the company has adequate inventory and cash on hand.

 

1 points

QUESTION 13

1.Nobula Corp. is preparing their budget for the second quarter and provides the following data:

 

 

Apr May Jun

Budgeted purchases $20,000 $24,000 $18,000

Budgeted Cash Payments for Inventory Purchases Apr May Jun

60% of previous month purchases $6,000 $12,000 $14,400

40% of current month purchases 8,000 9,600 7,200

Total cash payments $14,000 $21,600 $21,600

 

 

Assume that accounts payable pertains only to suppliers of inventory. Based on the above data, the amount of Accounts Payable that should be shown in the budgeted balance sheet as on June 30 is ________.

 

$3,600

$10,800

 

$5,400

 

$12,000

1 points

QUESTION 14

1.Acme Inc. has prepared its third quarter budget and provided the following data:

Jul Aug Sep

Cash collections $50,000 $40,000 $48,000

Cash payments:

Purchases of inventory 31,000 22,000 18,000

Operating expenses 12,000 9,000 11,600

Capital expenditures 13,000 25,000 0

 

 

The cash balance on June 30 is projected to be $4,000. The company has to maintain a minimum cash balance of $5,000 and is authorized to borrow at the end of each month to make up any shortfalls. It may borrow in increments of $5,000 and has to pay interest every month at an annual rate of 5%. All financing transactions are assumed to take place at the end of the month. The loan balance should be repaid in increments of $5,000 whenever there is surplus cash. Calculate the ending cash balance before financing for August.

 

($8,000)

 

$5,000

 

$9,000

 

$3,000

 

1 points

QUESTION 15

1.Which of the following describes the selling and administrative expenses budget?

 

It captures the variable and fixed components of selling and administrative expenses of the business.

 

It depicts the breakdown of sales based on terms of collection.

 

It shows the cash flows related to the selling and administrative expenses and helps in planning to ensure the business has adequate cash.

 

It aids in planning to ensure the company has adequate inventory on hand.

1 points

QUESTION 16

1.Uncle’s Caps Inc. a merchandising company has provided the following budgeted amounts for the next budget period.

 

 

Balance of cash at the beginning $30,000

Cash collections 680,000

Payments for:

Purchase of inventory 350,000

Selling and administrative expenses 70,400

Capital expenditures 89,000

 

 

A minimum cash balance of $250,000 is required to be maintained. The company can borrow in increments of $10,000 as and when required. Assume the company can borrow the needed funds at the end of the period. Calculate the ending cash balance for the budget period.

 

$250,600

 

$540,230

 

$300,000

 

$320,300

 

 

 

 

 

 

 

 

 

 

 

1 points

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