Academic Learning had prepared the following sales budget, schedule of budgeted cash receipts, and cash budget for
Question:
Academic Learning had prepared the following sales budget, schedule of budgeted cash receipts, and cash budget for 2019:
Academic Learning | |||||
Sales Budget | |||||
For the Year Ended December 31, 2019 | |||||
First | Second | Third | Fourth | ||
Quarter | Quarter | Quarter | Quarter | Total | |
Budgeted tablets to be sold | 550 | 350 | 1,600 | 500 | 3,000 |
Sales price per unit | $550 | $550 | $550 | $550 | $550 |
Total sales | $302,500 | $192,500 | $880,000 | $275,000 | $1,650,000 |
Schdule of Cash Receipts from Customers | ||||||
First | Second | Third | Fourth | |||
Quarter | Quarter | Quarter | Quarter | Total | ||
Total sales | $302,500 | $192,500 | $880,000 | $275,000 | $1,650,000 | |
First | Second | Third | Fourth | |||
Quarter | Quarter | Quarter | Quarter | Total | ||
Cash Receipts from Customers: | ||||||
Accounts Receivable balance, December 31, 2018 | $22,000 | |||||
1st Qtr.—Cash sales (20%) | 60,500 | |||||
1st Qtr.—Credit sales (80%), 40% collected in 1st qtr. | 96,800 | |||||
1st Qtr.—Credit sales (80%), 60% collected in 2nd qtr. | $145,200 | |||||
2nd Qtr.—Cash sales (20%) | 38,500 | |||||
2nd Qtr.—Credit sales (80%), 40% collected in 2nd qtr. | 61,600 | |||||
2nd Qtr.—Credit sales (80%), 60% collected in 3rd qtr. | $92,400 | |||||
3rd Qtr.—Cash sales (20%) | 176,000 | |||||
3rd Qtr.—Credit sales (80%), 40% collected in 3rd qtr. | 281,600 | |||||
3rd Qtr.—Credit sales (80%), 60% collected in 4th qtr. | $422,400 | |||||
4th Qtr.—Cash sales (20%) | 55,000 | |||||
4th Qtr.—Credit sales (80%), 40% collected in 4th qtr. | 88,000 | |||||
Total cash receipts from customers | $179,300 | $245,300 | $550,000 | $565,400 | $1,540,000 | |
Accounts Receivable balance, December 31, 2019: | ||||||
4th Qtr.—Credit sales (80%), 60% collected in 1st qtr of 2020 | $132,000 |
Academic Learning | ||||||
Cash Budget | ||||||
For the Year Ended December 31, 2019 | ||||||
First | Second | Third | Fourth | |||
Quarter | Quarter | Quarter | Quarter | Total | ||
Beginning cash balance | $38,000 | $35,575 | $35,680 | $35,525 | $38,000 | |
Cash receipts | 179,300 | 245,300 | 550,000 | 565,400 | 1,540,000 | |
Cash available | 217,300 | 280,875 | 585,680 | 600,925 | 1,578,000 | |
Cash payments: | ||||||
Capital expenditures | 40,000 | 40,000 | 40,000 | 40,000 | 160,000 | |
Purchases of direct materials | 33,280 | 146,880 | 172,440 | 139,320 | 491,920 | |
Direct labor | 14,080 | 38,400 | 88,320 | 33,280 | 174,080 | |
Manufacturing overhead | 97,640 | 100,300 | 105,760 | 99,740 | 403,440 | |
Selling and administrative expenses | 59,725 | 58,625 | 65,500 | 59,450 | 243,300 | |
Income taxes | 3,000 | 3,000 | 3,000 | 3,000 | 12,000 | |
Interest expense | 0 | 990 | 3,135 | 2,055 | 6,180 | |
Total cash payments | 247,725 | 388,195 | 478,155 | 376,845 | 1,490,920 | |
Ending cash balance before financing | (30,425) | (107,320) | 107,525 | 224,080 | 87,080 | |
Minimum cash balance desired | (35,000) | (35,000) | (35,000) | (35,000) | (35,000) | |
Projected cash excess (deciency) | (65,425) | (142,320) | 72,525 | 189,080 | 52,080 | |
Financing: | ||||||
Borrowing | 66,000 | 143,000 | 0 | 0 | 209,000 | |
Principal repayments | 0 | 0 | (72,000) | (137,000) | (209,000) | |
Total effects of financing | 66,000 | 143,000 | (72,000) | (137,000) | 0 | |
Ending cash balance | $35,575 | $35,680 | $35,525 | $87,080 | 87,080 |
Academic Learning decided to revise its sales budget to show fourth quarter sales of 650 tablets due to the expectation of increased holiday sales.
Suppose a change in the receipt of cash from sales on account is as follows:
Requirement 1. Revise the schedule of budgeted cash receipts to include the increase in fourth quarter sales and the change in the timing of customer receipts. (If a box is not used in the table, leave the box empty; do not enter a zero. Round your answers to the nearest dollar.)
Requirement 2. How will the changes in cash receipts affect the cash budget?
Principles Of Managerial Finance
ISBN: 978-0136119463
13th Edition
Authors: Lawrence J. Gitman, Chad J. Zutter