# ACCOUNTING

10.

value: 3.00 points

Problem 4-19 Schedule of cash receipts [LO2]

 Watt’s Lighting Stores made the following sales projections for the next six months. All sales are credit sales.

 March \$ 48,000 June \$ 52,000 April 54,000 July 60,000 May 43,000 August 62,000

 Sales in January and February were \$51,000 and \$50,000, respectively.       Experience has shown that of total sales, 10 percent are uncollectible, 35 percent are collected in the month of sale, 45 percent are collected in the following month, and 10 percent are collected two months after sale.

 (a) Prepare a monthly cash receipts schedule for the firm for March through August. (Omit the “\$” sign in your response.)

 WATT’S LIGHTING STORES Cash Receipts Schedule January February March April May June July August Sales \$ \$ \$ \$ \$ \$ \$ \$ Collections of current sales Collections of prior month’s sales Collections of sales 2 months   earlier Total cash receipts \$ \$ \$ \$ \$ \$

 (b) Of the sales expected to be made during the six months from March through August, how much will still be uncollected at the end of August? How much of this is expected to be collected later? (Omit the “\$” sign in your response.)
 Amount Uncollected \$ Expected to be collected \$
 VOLT BATTERY COMPANY Summary of Cash payments Dec. Jan. Feb. March April May June Units produced Material cost \$ \$ \$ \$ \$ \$ Labor cost Overhead cost Interest Employee bonuses Total cash payments \$ \$ \$ \$ \$ \$

11.

value: 4.00 points

Problem 4-23 Schedule of cash payments [LO2]

 The Volt Battery Company has forecast its sales in units as follows:

 January 2,300 May 2,850 February 2,150 June 3,000 March 2,100 July 2,700 April 2,600

 Volt Battery always keeps an ending inventory equal to 130% of the next month’s expected sales. The ending inventory for December (January’s beginning inventory) is 2,990 units, which is consistent with this policy. Materials cost \$12 per unit and are paid for in the month after purchase. Labor cost is \$5 per unit and is paid in the month the cost is incurred. Overhead costs are \$13,500 per month. Interest of \$9,500 is scheduled to be paid in March, and employee bonuses of \$14,700 will be paid in June.

 (a) Prepare a monthly production schedule for January through June.

 VOLT BATTERY COMPANY Production Schedule Jan. Feb. March April May June July Forecasted unit sales Desired ending inventory Beginning inventory Units to be produced

 (b) Prepare a monthly summary of cash payments for January through June. Volt  produced 2,100 units in December. (Omit the “\$” sign in your response.)

12.

value: 5.00 points

Problem 4-25 Complete cash budget [LO2]

 Harry’s Carryout Stores has eight locations. The firm wishes to expand by two more stores and needs a bank loan to do this. Mr. Wilson, the banker, will finance construction if the firm can present an acceptable three-month financial plan for January through March. The following are actual and forecasted sales figures:

 Actual Forecast Additional Information November \$ 270,000 January \$ 420,000 April forecast \$ 410,000 December 360,000 February 460,000 March 420,000

 Of the firm’s sales, 30 percent are for cash and the remaining 70 percent are on credit. Of credit sales, 40 percent are paid in the month after sale and 60 percent are paid in the second month after the sale. Materials cost 40 percent of sales and are purchased and received each month in an amount sufficient to cover the following month’s expected sales. Materials are paid for in the month after they are received. Labor expense is 25 percent of sales and is paid for in the month of sales. Selling and administrative expense is 25 percent of sales and is also paid in the month of sales. Overhead expense is \$31,500 in cash per month.

 Depreciation expense is \$10,700 per month. Taxes of \$8,700 will be paid in January, and dividends of \$5,500 will be paid in March. Cash at the beginning of January is \$94,000, and the minimum desired cash balance is \$89,000.

 (a) Prepare a schedule of monthly cash receipts for January, February and March. (Omit the “\$” sign in your response.)

 HARRY’S CARRY-OUT STORES Cash Receipts Schedule November December January February March April Sales \$ \$ \$ \$ \$ \$ Cash sales Credit sales Collections in the month   after credit sales) Collections two months   after credit sales) Total cash receipts \$ \$ \$

 (b) Prepare a schedule of  monthly cash payments for January, February and March. (Omit the “\$” sign in your response.)

 HARRY’S CARRY-OUT STORES Cash Payments Schedule January February March Payments for purchases \$ \$ \$ Labor expense Selling and admin. exp. Overhead Taxes Dividends Total cash payments \$ \$ \$

 (c) Prepare a schedule of monthly cash budget with borrowings and repayments for January, February and March. (Leave no cells blank – be certain to enter “0” wherever required. Negative amounts should be indicated by a minus sign. Omit the “\$” sign in your response.)

 HARRY’S CARRY-OUT STORES Cash Budget January February March Total cash receipts \$ \$ \$ Total cash payments Net cash flow Beginning cash balance Cumulative cash balance Monthly loan or (repayment) Cumulative loan balance Ending cash balance \$ \$ \$

13.

value: 1.00 points

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