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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