BMAL530 Assignment: Homework 4 FALL 2014 26205

Question

1.

award:
4.28 out of
4.28 points

 

 

 

Kayak Co. budgeted the following cash receipts (excluding cash receipts from loans received) and cash disbursements (excluding cash disbursements for loan principal and interest payments) for the first three months of next year.

 

Cash
Receipts
Cash
Disbursements
January $ 518,000 $ 471,000
February 403,000 366,000
March 471,000 525,000

 

According to a credit agreement with the company’s bank, Kayak promises to have a minimum cash balance of $40,000 at each month-end. In return, the bank has agreed that the company can borrow up to $160,000 at an annual interest rate of 12%, paid on the last day of each month. The interest is computed based on the beginning balance of the loan for the month. The company repays principal on the loan with available cash on the last day of each month. The company has a cash balance of $40,000 and a loan balance of $80,000 at January 1.

 

Prepare monthly cash budgets for each of the first three months of next year. (Amounts to be deducted should be indicated by a minus sign.)

2.

award:
4.28 out of
4.28 points

 

 

 

Walker Company prepares monthly budgets. The current budget plans for a September ending inventory of 40,000 units. Company policy is to end each month with merchandise inventory equal to a specified percent of budgeted sales for the following month. Budgeted sales and merchandise purchases for the next three months follow.

 

Sales (Units) Purchases (Units)
July 220,000 236,000
August 300,000 298,000
September 290,000 272,000

3.

award:
4.10 out of
4.28 points

 

 

 

Use the following information to prepare the July cash budget for Acco Co. It should show expected cash receipts and cash disbursements for the month and the cash balance expected on July 31.

 

a. Beginning cash balance on July 1: $74,000.
b. Cash receipts from sales: 10% is collected in the month of sale, 50% in the next month, and 40% in the second month after sale (uncollectible accounts are negligible and can be ignored). Sales amounts are: May (actual), $1,800,000; June (actual), $1,240,000; and July (budgeted), $1,420,000.
c. Payments on merchandise purchases: 75% in the month of purchase and 25% in the month following purchase. Purchases amounts are: June (actual), $510,000; and July (budgeted), $470,000.
d. Budgeted cash disbursements for salaries in July: $230,000.
e. Budgeted depreciation expense for July: $14,000.
f. Other cash expenses budgeted for July: $250,000.
g. Accrued income taxes due in July: $90,000.
h. Bank loan interest due in July: $7,000.

 

 

 

 

 

4.

award:
4.28 out of
4.28 points

 

 

 

Following information relates to Acco Co.

 

a. Beginning cash balance on July 1: $35,000.
b. Cash receipts from sales: 24% is collected in the month of sale, 50% in the next month, and 26% in the second month after sale (uncollectible accounts are negligible and can be ignored). Sales amounts are: May (actual), $1,204,000; June (actual), $840,000; and July (budgeted), $980,000.
c. Payments on merchandise purchases: 48% in the month of purchase and 52% in the month following purchase. Purchases amounts are: June (actual), $301,000; and July (budgeted), $600,000.
d. Budgeted cash disbursements for salaries in July: $147,700.
e. Budgeted depreciation expense for July: $8,400.
f. Other cash expenses budgeted for July: $105,000.
g. Accrued income taxes due in July: $80,000 (related to June).
h. Bank loan interest paid July 31: $4,620.

 

Additional Information:
a. Cost of goods sold is 35% of sales.
b. Inventory at the end of June is $56,000 and at the end of July is $313,000.
c. Salaries payable on June 30 are $35,000 and are expected to be $28,000 on July 31.
d. The equipment account balance is $1,120,000 on July 31. On June 30, the accumulated depreciation on equipment is $196,000.
e. The $4,620 cash payment of interest represents the 1% monthly expense on a bank loan of $462,000.
f. Income taxes payable on July 31 are $132,398, and the income tax rate applicable to the company is 35%.
g. The only other balance sheet accounts are: Common Stock, with a balance of $482,520 on June 30; and Retained Earnings, with a balance of $750,400 on June 30.

 

Prepare a budgeted income statement for the month of July and a budgeted balance sheet for July 31.

 

 

 

 

 

5.

award:
4.28 out of
4.28 points

 

 

 

Tempo Company’s fixed budget for the first quarter of calendar year 2013 reveals the following.

 

Sales (10,000 units) $ 2,020,000
Cost of goods sold
Direct materials $ 236,700
Direct labor 434,700
Production supplies 266,200
Plant manager salary 36,700 974,300




Gross profit 1,045,700
Selling expenses
Sales commissions 77,200
Packaging 146,700
Advertising 100,000 323,900


Administrative expenses
Administrative salaries 86,700
Depreciation—office equip. 56,700
Insurance 26,700
Office rent 36,700 206,800




Income from operations $ 515,000





 

Prepare flexible budgets that show variable costs per unit, fixed costs, and three different flexible budgets for sales volumes of 8,000, 10,000, and 12,000 units. (Round cost per unit to 2 decimal places.)

 

 

 

 

6.

award:
4.28 out of
4.28 points

 

 

 

Solitaire Company’s fixed budget performance report for June follows. The $630,000 budgeted expenses include $592,200 variable expenses and $37,800 fixed expenses. Actual expenses include $49,800 fixed expenses.

 

Fixed Budget Actual Results Variances
Sales (in units) 8,400 10,800








Sales (in dollars) $ 840,000 $ 1,080,000 $ 240,000 F
Total expenses 630,000 756,000 126,000 U






Income from operations $ 210,000 $ 324,000 $ 114,000 F













 

Prepare a flexible budget performance report showing any variances between budgeted and actual results. List fixed and variable expenses separately.(Do not round intermediate calculations.)

7.

award:
4.15 out of
4.32 points

 

 

 

Bay City Company’s fixed budget performance report for July follows. The $367,000 budgeted expenses include $280,000 variable expenses and $87,000 fixed expenses. Actual expenses include $77,000 fixed expenses.

 

Fixed Budget Actual Results Variances
Sales (in units) 5,000 3,900








Sales (in dollars) $ 400,000 $ 347,100 $ 52,900 U
Total expenses 367,000 337,000 30,000 F






Income from operations $ 33,000 $ 10,100 $ 22,900 U













 

Prepare a flexible budget performance report that shows any variances between budgeted results and actual results. List fixed and variable expenses separately. (Do not round intermediate calculations.)

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