1a. Given the information that follows, prepare a cash budget for the XYZ Store for the...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
1a. Given the information that follows, prepare a cash budget for the XYZ Store for the first six months of 2017. All prices and costs remain constant. Sales are 88% for credit and 12% for cash. • . • . . . With respect to credit sales, 55% are collected in the month after the sale, 25% in the second month, and 20% in the third. Bad-debt losses are insignificant. • Sales, actual and estimated, are (* for actual sales): October 2016 $310,000* November 2016 December 2016 Wages and salaries are: January 2017 February 2017 March 2017 340,000* April 2017 270,000* May 2017 June 2017 January 2017 240,000 220,000 February 2017 250,000 July 2017 320,000 Merchandises are purchased one month before the anticipated sales at 74% (COGS). Assume all purchases arrived in the same month of ordering, and the company will pay the purchase exactly 1 month after placing the order. $40,000 45,000 55,000 March 2017 $240,000 340,000 290,000 April 2017 May 2017 June 2017 Rent is $6,000 a month. Interest of $8,500 is due on the last day of each calendar quarter, and no quarterly cash dividends are planned. A tax prepayment of $60,000 for 2017 income is due in April. A capital investment of $60,000 is planned in June, to be paid for then. b. Use the cash budget worked out in Part (a) and the following additional information to prepare a forecast income statement for the first half of 2017 for the XYZ Store. (Note that the store maintains a safety stock of inventory.) . Inventory at 12/31/16 was $220,000. Cash Accounts receivable Inventory Fixed assets, net The company has a cash balance of $90,000 at December 31, 2016, which is the minimum desired level for cash. Funds can be borrowed in multiples of $10,000. (Ignore interest on such borrowings.) $50,000 65,000 55,000 $90,000 Depreciation is taken on a straight-line basis on $250,000 of assets with an average remaining life of 10 years and no salvage value. The tax rate is 34 percent. 427,500 220,000 250,000 $987.500 c. Given the following information and that contained in Parts (a) and (b), construct a forecast balance sheet as of June 30, 2017, for the XYZ Store. XYZ Store balance sheet at December 31, 2016 ASSETS LIABILITIES AND EQUITY $140,000 500,000 Accounts payable Bonds Common stock and retained earnings 347,500 $987.500 1a. Given the information that follows, prepare a cash budget for the XYZ Store for the first six months of 2017. All prices and costs remain constant. Sales are 88% for credit and 12% for cash. • . • . . . With respect to credit sales, 55% are collected in the month after the sale, 25% in the second month, and 20% in the third. Bad-debt losses are insignificant. • Sales, actual and estimated, are (* for actual sales): October 2016 $310,000* November 2016 December 2016 Wages and salaries are: January 2017 February 2017 March 2017 340,000* April 2017 270,000* May 2017 June 2017 January 2017 240,000 220,000 February 2017 250,000 July 2017 320,000 Merchandises are purchased one month before the anticipated sales at 74% (COGS). Assume all purchases arrived in the same month of ordering, and the company will pay the purchase exactly 1 month after placing the order. $40,000 45,000 55,000 March 2017 $240,000 340,000 290,000 April 2017 May 2017 June 2017 Rent is $6,000 a month. Interest of $8,500 is due on the last day of each calendar quarter, and no quarterly cash dividends are planned. A tax prepayment of $60,000 for 2017 income is due in April. A capital investment of $60,000 is planned in June, to be paid for then. b. Use the cash budget worked out in Part (a) and the following additional information to prepare a forecast income statement for the first half of 2017 for the XYZ Store. (Note that the store maintains a safety stock of inventory.) . Inventory at 12/31/16 was $220,000. Cash Accounts receivable Inventory Fixed assets, net The company has a cash balance of $90,000 at December 31, 2016, which is the minimum desired level for cash. Funds can be borrowed in multiples of $10,000. (Ignore interest on such borrowings.) $50,000 65,000 55,000 $90,000 Depreciation is taken on a straight-line basis on $250,000 of assets with an average remaining life of 10 years and no salvage value. The tax rate is 34 percent. 427,500 220,000 250,000 $987.500 c. Given the following information and that contained in Parts (a) and (b), construct a forecast balance sheet as of June 30, 2017, for the XYZ Store. XYZ Store balance sheet at December 31, 2016 ASSETS LIABILITIES AND EQUITY $140,000 500,000 Accounts payable Bonds Common stock and retained earnings 347,500 $987.500
Expert Answer:
Answer rating: 100% (QA)
la Total Sales Cash Collection Cash sales 55 25 20 Total Collection less payments Purchases Salaries ... View the full answer
Related Book For
Fundamentals Of Financial Management
ISBN: 9780273713630
13th Revised Edition
Authors: James Van Horne, John Wachowicz
Posted Date:
Students also viewed these general management questions
-
The promoter of a touring dance show wishes to analyse how the price per ticket affects the size of its audiences. She tests two prices, K170 and K200, over 10 shows each which give rise to the...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
Given the information that follows, prepare a cash budget for the Central City Department Store for the first six months of 20X2. a. All prices and costs remain constant. b. Sales are 75 percent for...
-
Use the following to answer questions 1-3 below The records of Teresa's Toys Co. as of December 31, 20XX. Accounts payable Insurance expense Accounts receivable s10,000 500 19,000 S60,000 12,000...
-
The adjusted trial balance for Salonika Marketing Co. follows. Complete the four right-most columns of the table by first entering information for the four closing entries (keyed 1 through 4) and...
-
Let z be a nonzero complex number and n a negative integer (n = 1,2, . . .). Also, write z = reiθ and m = n = 1, 2, . . . . Using the expressions verify that (zm)1 = (z1)m and hence that...
-
Washington Mutual Insurance Company issued an \(\$ 80,000,7 \%, 10\)-vear bond payable at a price of 110 on January 1, 2009. Journalize the following transactions for Washington. Include an...
-
At the market close on October 27 of a recent year, McDonalds Corporation had a closing stock price of $93.49. In addition, McDonalds Corporation had a dividend per share of $2.44 during the previous...
-
Please give a personal example of each heuristic (it has to be the example from yourself) 1. The Availability Heuristic: 2. Representativeness Heuristic: 3. Affect Heuristic: 4. Anchoring Heuristic:...
-
A steam power plant operating on a regenerative cycle, as illustrated in Fig. 8,5, includes just one feed water healer. Steam enters the turbine at 650(psia) and 900(oF) and exhausts at 1(psia)....
-
When the price faced by a competitive firm was $5, the firm produced nothing in the short run. However, when the price rose to $10, the firm produced 100 tons of output. From this we can infer that O...
-
Explain project value chain analysis and briefly discuss the steps involved in performing such an analysis.
-
If MBSE is a tool that satisfies an SE solution space, define the problem space it is intended fill.
-
How does an Enterprise resolve gaps between a Problem Space and its Solution Space(s)?
-
Suggest and justify the kind of commission structure that you would put into place.
-
What is Model-Based Systems Engineering (MBSE), its purpose, descriptive language, and application to SE?
-
Holt Inc. is using external environmental analysis to identify early signals of potential environmental changes and to spot trends. Which part of external environmental analysis is Holt Inc. using?...
-
Assume today is the 21st of February. Using the information below, FT Extract, answer the following questions (parts i and ii). You work for a US company that is due to receive 250 million in June...
-
The common stockholder is considered the residual owner of a corporation. What does this mean in terms of risk and return?
-
In any proxy attempt by an outside group to gain control of a company, the advantage lies with management. What are the reasons for this advantage?
-
What are the costs of maintaining too large a level of working capital? Too small a level of working capital?
-
Which of the following procedures would an auditor normally plan only for a first-time audit? a. Review litigation against the company that was settled in prior years. b. Review capital stock...
-
Match the term or terms that relate to each description. Each term may be used once, more than once, or not at all. Description 1. The confirmation of a CPA's responsibility for an audit. 2. In all...
-
Before applying substantive tests to the details of asset accounts at an interim date, an auditor should assess a. Control risk at below the maximum level. b. Inherent risk at the maximum level. c....
Study smarter with the SolutionInn App