subject
Business, 23.04.2021 15:50 JakkuZakku9436

Garden Sales, Inc, sells garden supplies. Management is planning its cash needs for the second quarter. The company usually has to borrow money during this quarter to support peak sales of lawn care equipment, which occur during May. The following information has been assembled to assist in preparing a cash budget for the quarter: a. Budgeted monthly absorption costing income statements for April-July are:
April May June July
Sales $460,000 $990,000 $440,000 $340,000
Cost of goods sold 322,000 693,000 308,000 238,000
Gross margin 138,000 297,000 132,000 102,000
Selling and administrative expenses *
Selling expense 89,000 94,000 55,000 34,000
Administrative expense 42,000 56,000 34,400 32,000
Total selling and administrative expenses 131,000 150,000 89,400 66,000
Net operating income $7,000 $147,000 $42,600 36,000
* Includes $16,000 of depreciation each month.
b. Sales are 20% for cash and 80% on account.
c. Sales on account are collected over a three-month period with 10% collected in the month of sale: 70% collected in the first month following the month of sale, and the remaining 20% collected in the second month following the month of sale. February's sales totaled $160,000, and March's sales totaled $220,000
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% is paid in the following month. Accounts payable at March 31 for inventory purchases during March total $93,800.
e. Each month's ending inventory must equal 20% of the cost of the merchandise to be sold in the following month. The merchandise
inventory at March 31 is $64,400.
f. Dividends of $24,000 will be declared and paid in April.
g. Land costing $32,000 will be purchased for cash in May.
h. The cash balance at March 31 is $46,000; the company must maintain a cash balance of at least $40,000 at the end of each month.
i. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $200,000. 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.
The company's president is interested in knowing how reducing inventory levels and collecting accounts receivable sooner will impact the cash budget. He revises the cash collection and ending inventory assumptions as follows:
1. Sales continue to be 20% for cash and 80% on credit. However, credit sales from April, May, and June are collected over a three-month period with 25% collected in the month of sale, 65% collected in the month following sale, and 10% in the second month following sale. Credit sales from February and March are collected during the second quarter using the collection percentages specified in Problem 8-24.
2. The company maintains its ending inventory levels for April, May, and June at 15% of the cost of merchandise to be sold in the following month. The merchandise inventory at March 31 remains $84,000 and accounts payable for inventory purchases at March 31 remains $126,000.
Required:
1. Using the president's new assumptions in (1) above, prepare a schedule of expected cash collections for April, May, and June and for the quarter in total.
2. Using the president's new assumptions in (2) above, prepare the following for merchandise inventory:
a. A merchandise purchases budget for April, May, and June.
b. A schedule of expected cash disbursements for merchandise purchases for April, May, and June and for the quarter in total.
3. Using the president's new assumptions prepare a cash budget for April, May, and June, and for the quarter in total.
4. Prepare a brief memorandum for the president explaining how his revised assumptions affect the cash budget.

ansver
Answers: 3

Other questions on the subject: Business

image
Business, 22.06.2019 00:30, issaaamiaaa15
Needs to schedule the staffing of the center. it is open from 8am until midnight. larry has monitored the usage of the center at various times of the day and determined that the following number of computer consultants are required: time of dayminimum number of consultants required to be on duty8 am-noon4noon-4 pm84pm-8pm108pm-midnight6 two types of computer consultants can be hired: full-time and part-time. the full- time consultants work for eight consecutive hours in any of the shifts: morning (8am- 4pm), afternoon (noon-8pm) and evening (4pm-midnight). full-time consultants are paid $14 per hour. part-time consultants can be hired to work any of the four shifts listed in the table. part-time consultants are paid $12 per hour. an additional requirement is that during every time period, there must be at least two full-time consultants on duty for every part-time consultant on duty. larry would like to determine how many full-time and part-time consultants should work each shift to meet the above requirements at the minimum possible cost. formulate this as an lp problem. you must define your variables clearly
Answers: 2
image
Business, 22.06.2019 08:20, XAINEE
Suppose that jim plans to borrow money for an education at texas a& m university. jim will need to borrow $25,000 at the end of each year for the next five years (total=$125,000). jim wishes his parents could pay for his education but they can’t. at least, he qualifies for government loans with a reduced interest rate while he is in school. he has a special arrangement with aggiebank to lend him the money at a subsidized rate of 1% over five years without having to make a payment until the end of the fifth year. however, at the end of the fifth year, jim agrees to pay off the loan by borrowing from longhorn bank. longhorn bank will lend him the money he needs at an annual interest rate of 6%. jim agrees to pay back the longhorn bank with 20 annual payments and the payments will be uniform (equal annual payments including principal and interest). (i) calculate how much money jim has to borrow at the end of 5 years to pay off the loan with aggiebank. a. $121,336 b. $127,525 c. $125,000 d. $102,020 e. none of the above
Answers: 2
image
Business, 22.06.2019 11:00, HUNIXX6561
Samantha is interested in setting up her own accounting firm and wants to specialize in the area of accounting that has experienced the most significant growth in recent years. which area of accounting should she choose as her specialty? samantha should choose as her specialty.
Answers: 1
image
Business, 22.06.2019 12:30, cheyannehatton
Suppose that two firms produce differentiated products and compete in prices. as in class, the two firms are located at two ends of a line one mile apart. consumers are evenly distributed along the line. the firms have identical marginal cost, $60. firm b produces a product with value $110 to consumers. firm a (located at 0 on the unit line) produces a higher quality product with value $120 to consumers. the cost of travel are directly related to the distance a consumer travels to purchase a good. if a consumerhas to travel a mile to purchase a good, the incur a cost of $20. if they have to travel x fraction of a mile, they incur a cost of $20x. (a) write down the expressions for how much a consumer at location d would value the products sold by firms a and b, if they set prices p_{a} and p_{b} ? (b) based on your expressions in (a), how much will be demanded from each firm if prices p_{a} and p_{b} are set? (c) what are the nash equilibrium prices?
Answers: 3
You know the right answer?
Garden Sales, Inc, sells garden supplies. Management is planning its cash needs for the second quart...

Questions in other subjects: