Hope Morris Cycle prepares an annual cash budget by quarters. Its cash budget is based on the following assumptions. The January 1, 2020 cash balance is expected to be $38,000. First quarter sales $180,000; second quarter sales $210,000; third quarter sales $240,000; Fourth quarter sales $270,000. 60% are collected in the quarter sold and 40% are collected in the following quarter. Accounts receivable of $60,000 at December 31, 2019 is expected to be collected in full in the first quarter of 2020. Short-term investment securities are expected to be sold for $2,000 cash in the first quarter. Management plans to purchase a truck in the second quarter for $10,000 cash. Hope Morris makes equal quarterly payments of its estimated $12,000 annual income taxes. Required: a) Prepare schedules for collections from customers for all quarters 2020. b) Cash budget for the first two quarters 2020.
Hope Morris Cycle prepares an annual cash budget by quarters. Its cash budget is based on the following assumptions. The January 1, 2020 cash balance is expected to be $38,000. First quarter sales $180,000; second quarter sales $210,000; third quarter sales $240,000; Fourth quarter sales $270,000. 60% are collected in the quarter sold and 40% are collected in the following quarter. Accounts receivable of $60,000 at December 31, 2019 is expected to be collected in full in the first quarter of 2020. Short-term investment securities are expected to be sold for $2,000 cash in the first quarter. Management plans to purchase a truck in the second quarter for $10,000 cash. Hope Morris makes equal quarterly payments of its estimated $12,000 annual income taxes. Required: a) Prepare schedules for collections from customers for all quarters 2020. b) Cash budget for the first two quarters 2020.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter8: Budgeting For Planning And Control
Section: Chapter Questions
Problem 11CE: Shalimar Company manufactures and sells industrial products. For next year, Shalimar has budgeted...
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
Hope Morris Cycle prepares an annual cash budget by quarters. Its cash budget is based on the following assumptions.
The January 1, 2020 cash balance is expected to be $38,000.
First quarter sales $180,000; second quarter sales $210,000; third quarter sales $240,000;
Fourth quarter sales $270,000. 60% are collected in the quarter sold and 40% are collected in the following quarter. Accounts receivable of $60,000 at December 31, 2019 is expected to be collected in full in the first quarter of 2020.
Short-term investment securities are expected to be sold for $2,000 cash in the first quarter.
Management plans to purchase a truck in the second quarter for $10,000 cash.
Hope Morris makes equal quarterly payments of its estimated $12,000 annual income taxes. Required:
a) Prepare schedules for collections from customers for all quarters 2020.
b) Cash budget for the first two quarters 2020.
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