ACCOUNTING

Exercise 22-7 Merchandising: Computing budgeted accounts payable and purchases%u2014sales forecast in dollars LO P1, P2

Big Sound, a merchandising company specializing in home computer speakers, budgets its monthly cost of goods sold to equal 60% of sales. Its inventory policy calls for ending inventory in each month to equal 30% of the next month’s budgeted cost of goods sold. All purchases are on credit, and 40% of the purchases in a month is paid for in the same month. Another 20% is paid for during the first month after purchase, and the remaining 40% is paid for in the second month after purchase. The following sales budgets are set: July, $200,000; August, $140,000; September, $170,000; October, $125,000; and November, $115,000.

 

 

 

 

Exercise 22-9A Manufacturing: Direct materials budget LO P3

Electro Company manufactures an innovative automobile transmission for electric cars. Management predicts that ending finished goods inventory for the first quarter will be 71,280 units. The following unit sales of the transmissions are expected during the rest of the year: second quarter, 216,000 units; third quarter, 496,000 units; and fourth quarter, 250,000 units. Company policy calls for the ending finished goods inventory of a quarter to equal 33% of the next quarter’s budgeted sales. (Ending inventory for the first quarter does not comply with company policy.) Each transmission requires 0.69 pounds of a key raw material. Electro Company aims to end each quarter with an ending inventory of direct materials equal to 33% of next quarter’s budgeted materials requirements. Direct materials cost $183 per unit.

 

Prepare a direct materials budget for the second quarter.

 

 

Exercise 22-12 Budgeted cash receipts LO P1

Jasper Company has sales on account and for cash. Specifically, 55% of its sales are on account and 45% are for cash. Credit sales are collected in full in the month following the sale. The company forecasts sales of $519,000 for April, $529,000 for May, and $554,000 for June. The beginning balance of Accounts Receivable is $304,500 on April 1.

 

Prepare a schedule of budgeted cash receipts for April, May, and June.

 

 

 

Exercise 22-13 Cash budget LO P1

Karim Corp. requires a minimum $10,000 cash balance. If necessary, loans are taken to meet this requirement at a cost of 1% interest per month (paid monthly). Any excess cash is used to repay loans at month-end. The cash balance on July 1 is $10,400 and the company has no outstanding loans. Forecasted cash receipts (other than for loans received) and forecasted cash payments (other than for loan or interest payments) are:

 

  July August September
  Cash receipts $ 26,000 $ 34,000 $ 42,000
  Cash disbursements   31,000   32,000   34,000

 

Prepare a cash budget for July, August, and September.

 

 

 

Exercise 22-14 Cash budget LO P1

Foyert Corp. requires a minimum $6,100 cash balance. If necessary, loans are taken to meet this requirement at a cost of 2% interest per month (paid monthly). Any excess cash is used to repay loans at month-end. The cash balance on October 1 is $6,100 and the company has an outstanding loan of $2,100. Forecasted cash receipts (other than for loans received) and forecasted cash payments (other than for loan or interest payments) follow.

 

  October November December
  Cash receipts $ 22,100 $ 16,100 $ 20,100
  Cash disbursements   24,150   15,100   15,900

 

Prepare a cash budget for October, November, and December

 

 

 

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