The following information pertains to a local company. The company hired you to prepare a cash...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
The following information pertains to a local company. The company hired you to prepare a cash budget for the first six months of 2024: (a) Cost and prices unchanged. (b) Cash sales - 25% and credit sales - 75%. (c) 60% of credit sales are collected in the month after sales, 30% in the second month and 10% in the third. No bad debts are anticipated. (d) Sales forecasts are as follows: October 2023 November 2023 December 2023 January 2024 February 2024 $ 1,200,000 1,400,000 1,600,000 600,000 800,000 (e) Gross profit margin 20%. (f) Anticipated purchases: January 2024 February 2024 March 2024 $ 640,000 640,000 960,000 (g) Wages and Salaries to be paid: January 2024 February 2024 March 2024 $ 120,000 160,000 200,000 March 2024 April 2024 May 2024 June 2024 July 2024 April 2024 May 2024 June 2024 April 2024 May 2024 June 2024 $ 800,000 1,200,000 1,000,000 800,000 1,200,000 $ 800,000 640,000 960,000 $ 200,000 160,000 140,000 (h) Interest on $1,000,000 @ 12% on bonds is due by the end of March and June. (i) Tax payment due in April $200,000. (j) Capital expenditure on plant and machinery planned for June is $120,000. (k) The Company has a cash balance of 400,000 at 31.12.2023. (1) The company can borrow (if needed) on monthly basis assuming the company wants to keep a minimum cash balance of $400,000 at the end of each month. (m) Rent is $ 8,000 per month. Required: 1. Prepare in good form the cash budget for the first six months of 2024. 2. Borrowing has a cost, so before you start borrowing what steps you may take to meet the $400,000 minimum cash requirement. 3. Why is the cash budget important since we prepare a budget income statement? The following information pertains to a local company. The company hired you to prepare a cash budget for the first six months of 2024: (a) Cost and prices unchanged. (b) Cash sales - 25% and credit sales - 75%. (c) 60% of credit sales are collected in the month after sales, 30% in the second month and 10% in the third. No bad debts are anticipated. (d) Sales forecasts are as follows: October 2023 November 2023 December 2023 January 2024 February 2024 $ 1,200,000 1,400,000 1,600,000 600,000 800,000 (e) Gross profit margin 20%. (f) Anticipated purchases: January 2024 February 2024 March 2024 $ 640,000 640,000 960,000 (g) Wages and Salaries to be paid: January 2024 February 2024 March 2024 $ 120,000 160,000 200,000 March 2024 April 2024 May 2024 June 2024 July 2024 April 2024 May 2024 June 2024 April 2024 May 2024 June 2024 $ 800,000 1,200,000 1,000,000 800,000 1,200,000 $ 800,000 640,000 960,000 $ 200,000 160,000 140,000 (h) Interest on $1,000,000 @ 12% on bonds is due by the end of March and June. (i) Tax payment due in April $200,000. (j) Capital expenditure on plant and machinery planned for June is $120,000. (k) The Company has a cash balance of 400,000 at 31.12.2023. (1) The company can borrow (if needed) on monthly basis assuming the company wants to keep a minimum cash balance of $400,000 at the end of each month. (m) Rent is $ 8,000 per month. Required: 1. Prepare in good form the cash budget for the first six months of 2024. 2. Borrowing has a cost, so before you start borrowing what steps you may take to meet the $400,000 minimum cash requirement. 3. Why is the cash budget important since we prepare a budget income statement?
Expert Answer:
Answer rating: 100% (QA)
Answer 1 Lets prepare the cash budget for the first six months of 2024 Month October November December January February March Sales 1200000 1400000 16... View the full answer
Related Book For
Posted Date:
Students also viewed these accounting questions
-
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...
-
What impact do attitudes have on consumer behavior?
-
The lease agreement and related facts indicate the following: a. Leased equipment had a retail cash selling price of $300,000. Its useful life was five years with no residual value. b. The lease term...
-
On July 31, Beaupre Ltd. had a cash balance of $14,786. The statement from the Caisse Populaire on that date showed a balance of $19,988. A comparison of the bank statement with the Cash account...
-
Use the graph of y = f(x) and symbolic techniques to solve each equation or inequality. Use set- builder or interval notation to write solution sets to the inequalities. (a) f(x)=0 (b) f(x) < 0 (c)...
-
In the 1970s, Special Electric Company brokered the sale of crocidolite asbestos, which is the most toxic form of asbestos, to Johns- Manville Corporation. Special Electric never held possession of...
-
Fancy Foods produces two types of microwavable products: beef-flavored ramen and shrimp-flavored ramen. The two products share common inputs such as noodle and spices. The production of ramen results...
-
How can the relationship between Online Analytical Processing (OLAP) systems and Customer Relationship Management (CRM) bolster an organization's marketing efforts?
-
You are comparing two annual salaries with equal present values. The discount rate applied is 7.25 percent. An annuity pays $2,500 on the first day of each year for 15 years. If paid at the end of...
-
Assume you have been put in charge of a new task force to determine the cause of lost sales in the Western region of your plastics manufacturing firm. As the leader of the task force, it is your job...
-
As an Administrative manager you observe that there is a gap in employee EDUCATION/TRAINING in your company. Some staff have not acquired the needed training, and some of them have skills that are...
-
Write three paragraphs. A reflection is focused on your feelings and how you can apply what you learned in your teams. Reflections must include: Three things that you plan to implement in your future...
-
My topic is domestic violence for my paper. What have you found in your research of your topic (please state topic again in your reply) that has surprised you? Provide what kind of reform you are...
-
Provide reasons why an entrepreneur would choose to operate as a private company over a sole trader and vice versa.
-
The following rates are actual yields on US yield curve observed on the dates given: 1 Mo 2 Mo 3 Mo 6 Mo 1 Yr 2 Yr 3 Yr 5 Yr 7 Yr 10 Yr 20 Yr 30 Yr 02/19/2021 0.03 0.03 0.04 0.06 0.07 0.11 0.22 0.59...
-
For each of the following reactions, express the equilibrium constant: a) H20 (I) H2 (g) + 02 (g) Ke = 1.0x107 b) Fe2 (g) 2F (g) Ke= 4.9 x 10-21 c) C (s) + O2 (g) d) H2 (g) + C2H4 (g) C2H6 (g) Ke =...
-
The directors of Oxford Academicals Football Club Limited are discussing whether player registrations can be recognized as assets on the clubs statement of financial position. There are two groups of...
-
Folly Limited produces novelty products. The products are produced on machines in the manufacturing department and they are then hand painted and finished in the finishing department. Folly Limited...
-
Abi runs a market stall selling fashion clothing for cash. Her business bank account balance at 1 September 2018, the start of her most recent trading year, was 7,342. She also had inventory of 2,382...
-
Example In January 2004, a Mars Exploration Rover touched down on the surface of Mars and rolled out for exploration ( Figure
-
A battery-operated wall clock no longer keeps timeneither hand moves. Develop a hypothesis explaining why it fails to work, and then make a prediction that permits you to test your hypothesis....
-
Does the snowflake have rotational symmetry in Figure 1.6? If yes, describe the ways in which the flake can be rotated without changing its appearance. Does it have reflection symmetry? If yes,...
Study smarter with the SolutionInn App