Selected values taken from Donegal’s annual master (static) budget for the current year appear below.

Cash Sales, gross	$30,000	Cost of Goods Sold	$19,000
Credit Sales, gross	$60,000	Interest Expense	$8,000
Credit Collections (net of discount, from collection schedule)	$85,000	Tax Expense	$5,040
Sales Discounts Granted (½ cash, ½ credit)	$1,200	Property, Plant & Equipment, Beginning Balance	$85,000
Uncollectible Accounts Expense	$900	Accumulated Depreciation, Beginning Balance	$15,000
Dividends Declared and Paid to Shareholders	$1,800	Retained Earnings, Beginning Balance	$75,000
Merchandise Purchased	$15,000	Equipment Purchases during the year	$12,000
Payments for Merchandise (from merchandise payment schedule)	$16,000	Cash, Beginning Balance	$11,000
Selling & Administrative (includes $5,000 of depreciation expense)	$45,000	Cash, Target Ending Balance	$10,000

Assume expenses that will require cash expenditures, such as taxes, are paid when incurred. Equipment purchases are paid at time of purchase. Put cash outflows in parentheses.

1). How much is Donegal’s expected cash excess (or deficiency) for the year?

2). What is Donegal’s budgeted net income for the year?

3). Determine the net budgeted ending value of Property, Plant & Equipment (net budgeted value = Cost – Accumulated Depreciation)?

Check figures:

1). $32,560

2). $10,860

3). $77,000

Answer rating: 100% (QA)

1Donegals expected cash excess or deficiency for the year Cash Beginning Balance 11000 Cash Sales le... View the full answer