The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information: Sales.. Manufacturing costs. Selling and administrative expenses. Capital expenditures September October November $250,000 $300,000 $315,000 150,000 42,000 180,000 185,000 48,000 51,000 200,000 The company expects to sell about 10% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month following the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense rep- resent $50,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in January, and the annual property taxes are paid in December. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month. Current assets as of September 1 include cash of $40,000, marketable securities of $75,000, and accounts receivable of $300,000 ($60,000 from July sales and $240,000 from August sales). Sales on account for July and August were $200,000 and $240,000, respectively. Current liabilities as of September 1 include $40,000 of accounts payable incurred in August for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of $55,000 will be made in October. Bridgeport's regular quarterly dividend of $25,000 is expected to be declared in October and paid in November. Management desires to maintain a minimum cash balance of $50,000. Instructions 2. 1. Prepare a monthly cash budget and supporting schedules for September, October, and November. On the basis of the cash budget prepared in part (1), what recommendation should be made to the controller? The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information: Sales.. Manufacturing costs. Selling and administrative expenses. Capital expenditures September October November $250,000 $300,000 $315,000 150,000 42,000 180,000 185,000 48,000 51,000 200,000 The company expects to sell about 10% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month following the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense rep- resent $50,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in January, and the annual property taxes are paid in December. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month. Current assets as of September 1 include cash of $40,000, marketable securities of $75,000, and accounts receivable of $300,000 ($60,000 from July sales and $240,000 from August sales). Sales on account for July and August were $200,000 and $240,000, respectively. Current liabilities as of September 1 include $40,000 of accounts payable incurred in August for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of $55,000 will be made in October. Bridgeport's regular quarterly dividend of $25,000 is expected to be declared in October and paid in November. Management desires to maintain a minimum cash balance of $50,000. Instructions 2. 1. Prepare a monthly cash budget and supporting schedules for September, October, and November. On the basis of the cash budget prepared in part (1), what recommendation should be made to the controller?
Expert Answer:
Related Book For
Financial and Managerial Accounting
ISBN: 978-1285078571
12th edition
Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac
Posted Date:
Students also viewed these accounting questions
-
The controller of Dash Shoes Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information: March April May Sales $114,000...
-
The controller of Mercury Shoes Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information: The company expects to sell...
-
The Home Depot, Inc. (HD) operates over 2,200 home improvement retail stores and is a competitor of Lowe's (LOW). The following data (in millions) were adapted from recent financial statements of The...
-
Norville Distributors, a wholesale firm, made sales using the following list prices and trade discounts. What amount should be recorded for each sale? 1. List price of $3,500 and trade discounts of...
-
A large study of 3000 Canadian children and their mothers found that the children of mothers who drank diet soda daily during pregnancy were twice as likely to be overweight at age 1 than children of...
-
What are some of the nonverbal clues to deception?
-
(Computation of Actual Return, Gains and Losses, Corridor Test, and Pension Expense) Erickson Company sponsors a defined benefit pension plan. The corporation's actuary provides the following...
-
Simplify the given expression and write the answer with only positive exponents. -113 P 3/7 7 3 54x y z 2 w) 3) (w + 2) (3w + w 4 2 (-3x +7x+8)= (x * + 7x *-12x-1) - 5 27-7-28 20-x-22 712-24-8...
-
1. Prove that if da and db, then d | 2. Prove that if d | a and d | b, then d (ax+by) for any integers x and y. 3. Prove that if m | (a - b), then m | (a - b) for any natural number n. ab.
-
Assuming a lack of market research, disadvantages for expanding the plant include all of the following except: a. The break-even point increases. b. The sales necessary to maintain the current income...
-
What circumstances would cause a company to make a CVP analysis If you owned a small business would you prefer variable costing or absorption costing and why Explain, with an example, a constrained...
-
Compost Inc. (CI) has a 8% return on equity, a reinvestment ratio of 70% and is expected to pay a $7 dividend. Suppose that the business is growing at 2% per year, and the price per share is $180....
-
If you pay off part of your mortgage early, the payment you make goes to the interest. True False
-
Describe how the risks of offering investors equity could negatively affect their business
-
Geppetto and Lewis decide that they would like to trade puzzles and puppets in order to better stock their toy store shelves. The table below compares their production possibilities schedules....
-
You are standing at x = 9.0 km and your assistant is standing at x = 3.0 km. Lightning bolt 1 strikes at x = 0 km and lightning bolt 2 strikes at x = 12.0 km. You see the flash from bolt 2 at t = 10...
-
The following excerpt is from a conversation between Kate Purvis, the president and chief operating officer of Light House Company, and her neighbor, Dot Evers. Dot: Kate, I'm taking a course in...
-
Recent balance sheet information for two companies in the food industry, H.J. Heinz Company and The Hershey Company, is as follows (in thousands of dollars): a. Determine the ratio of liabilities to...
-
Spotted Cow Dairy Company manufactures three productswhole milk, skim milk, and creamin two production departments, Blending and Packing. The factory overhead for Spotted Cow Dairy is $ 299,700. The...
-
Design a fast LOT-based filter bank with at least eight sub-bands.
-
Prove the relationship in Equation (9.210). CC2=CC = 0, (9.210)
-
Show that the relations in Equations (9.256)-(9.258) are valid. E(z) = [C3+2 (I - 3)]4. (9.256)
Study smarter with the SolutionInn App