Garden Sales, Incorporated, sells garden supplies. Management is planning its cash needs for the second quarter....
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Garden Sales, Incorporated, 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: Sales Cost of goods sold. Gross margin Selling and administrative expenses: Selling expense Administrative expense* Total selling and administrative expenses Net operating income *Includes $18,000 of depreciation each month. April $ 560,000 392,000 168,000 76,000 43,000 119,000 $ 49,000 May $760,000 532,000 228,000 96,000 57,600 June $ 460,000 322,000 138,000 57,000 35,600 153,600 A 92,600 $ 74,400 $ 45,400 July $360,000 252,000 108,000 36,000 34,000 70,000 $ 38,000 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; 80% collected in the first month following the month of sale; and the remaining 10% collected in the second month following the month of sale. February's sales totaled $175,000, and March's sales totaled $230,000. 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 $103,600. 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 $78,400. f. Dividends of $26,000 will be declared and paid in April. g. Land costing $34,000 will be purchased for cash in May. h. The cash balance at March 31 is $48,000; the company must maintain a cash balance of at least $40,000 at the end of each month. Saved Complete this question by entering your answers in the tabs below. Required 1 Required 2 Help Check my work c. Merchandise purchases are paid in full during the month following purchase. Accounts payable for merchandise purchases during March, which will be paid in April, total $153,500. d. In preparing the cash budget, assume that the $32,000 loan will be made in April and repaid in June. Interest on the loan will total $800. Required: 1. Calculate the expected cash collections for April, May, and June, and for the three months in total. 2. Prepare a cash budget, by month and in total, for the three-month period. Save & Exit Calculate the expected cash collections for April, May, and June, and for the three months in total. Submit Garden Sales, Incorporated, 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: Sales Cost of goods sold. Gross margin Selling and administrative expenses: Selling expense Administrative expense* Total selling and administrative expenses Net operating income *Includes $18,000 of depreciation each month. April $ 560,000 392,000 168,000 76,000 43,000 119,000 $ 49,000 May $760,000 532,000 228,000 96,000 57,600 June $ 460,000 322,000 138,000 57,000 35,600 153,600 A 92,600 $ 74,400 $ 45,400 July $360,000 252,000 108,000 36,000 34,000 70,000 $ 38,000 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; 80% collected in the first month following the month of sale; and the remaining 10% collected in the second month following the month of sale. February's sales totaled $175,000, and March's sales totaled $230,000. 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 $103,600. 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 $78,400. f. Dividends of $26,000 will be declared and paid in April. g. Land costing $34,000 will be purchased for cash in May. h. The cash balance at March 31 is $48,000; the company must maintain a cash balance of at least $40,000 at the end of each month. Saved Complete this question by entering your answers in the tabs below. Required 1 Required 2 Help Check my work c. Merchandise purchases are paid in full during the month following purchase. Accounts payable for merchandise purchases during March, which will be paid in April, total $153,500. d. In preparing the cash budget, assume that the $32,000 loan will be made in April and repaid in June. Interest on the loan will total $800. Required: 1. Calculate the expected cash collections for April, May, and June, and for the three months in total. 2. Prepare a cash budget, by month and in total, for the three-month period. Save & Exit Calculate the expected cash collections for April, May, and June, and for the three months in total. Submit
Expert Answer:
Answer rating: 100% (QA)
Requirement 1 Schedule of Expected Cash Collections P... View the full answer
Related Book For
Managerial accounting
ISBN: 978-0471467854
1st edition
Authors: ramji balakrishnan, k. s i varamakrishnan, Geoffrey b. sprin
Posted Date:
Students also viewed these general management questions
-
The following are the costs incurred by a printing company. 1. Print machine setup costs 2. Cost of complexity; the number and variety of products 3. Training costs for new staff 4. Ink 5. Customer...
-
A portion of the costs incurred by business organizations is designated as direct labor cost. As used in practice, the term direct labor cost has a wide variety of meanings. Unless the meaning...
-
Following are the costs to produce Product A, Product B, and Products A and B together. Which of the following exhibits economies of scope? a. 100, 150, 240 b. 100, 150, 250 c. 100, 150, 260 d. All...
-
You are an information technology (IT) intern working for Health Network, Inc. (Health Network), a fictitious health services organization headquartered in Minneapolis, Minnesota. Health Network has...
-
What documents must be present to trigger the recording of a sale (and associated receivable) in the accounting records?
-
Mach wave angle changes with airspeed as follows: a. It decreases as airspeed increases. b. It increases as airspeed increases. c. It remains the same with airspeed changes.
-
Newmarket Corp. has \(\$ 1,000,000\) of convertible bonds payable outstanding, with a bond premium of \(\$ 20,000\) also on the books. The bondholders have notified Newmarket that they wish to...
-
Watkins, Inc., has experienced an explosion in demand for its ram football novelties. The firm currently (time 0) pays a dividend of $0.50 per share. This dividend is expected to increase to $1.00...
-
The following table shows the expected returns from six different stocks in three different states of the economy: State of Economy Probability Return Stock A Return Stock B Return Stock C Return...
-
Given the following state for the Bankers Algorithm. 6 processes P0 through P5 4 resource types: A (15 instances); B (6 instances) C (9 instances); D (10 instances) Snapshot at time T0: a. Verify...
-
A publisher initially prices both hardback books and paperback books at $20 per book. The hardback version comes out first, followed two months later by the paperback version. The publisher initially...
-
Good Dog Enterprises sells goods with a warranty. At December 31, 2021 Good Dog has a warranty liability of $2 million and taxable income of $75 million. At December 31, 2020 Good Dog reported a...
-
Suppose that real GDP includes just cars and computers. The United States produces 50 cars and 5 computers, while Japan produces 5 cars and 10 computers, and each country has 10 workers and customers...
-
America's relationship with its mentally ill population continues to suffer due to inadequacies in the country's mental health care system. For the mentally ill in Chicago, the effects of this...
-
The open house presentation will give you a chance to practice presentation skills to a diverse family population. You will implement techniques of culturally responsive practices to develop a mock...
-
A new English -Language Arts (ELA) teacher is so excited to take all of the ideas she learned during her training and use them in the classroom. After a PLC (Professional Learning Committee) meeting,...
-
A debt security is an instrument representing a creditor relationship with an entity. Debt securities include U.S. government securities, municipal securities, corporate bonds, convertible debt, and...
-
What is the difference between adsorption and absorption?
-
Many decisions often involve qualitative factors. How can you reconcile this fact with the concept of relevant costs?
-
What do the terms underapplied overhead and overapplied overhead mean?
-
We often dip our toes in the water to check the temperature before jumping in. How might this analogy pertain to a firm introducing a new product? How does test marketing provide greater flexibility...
-
For a pure substance, if internal energy is considered to be the function of any two of the independent variables \(P, V\), and \(T\), then derive the following relations: (a) \(\left(\frac{\partial...
-
For a van der Waals gas, show that (a) \(d U=C_{V} d T+\frac{a}{V^{2}} d V\) (b) \(d S=C_{V} \frac{d T}{T}+\frac{R d V}{V-b}\)
-
What is Joule-Thomson coefficient? How does it relate to the heating or cooling effect of a gas passing through a porous plug?
Study smarter with the SolutionInn App