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of the is a concern and have been given the task of preparing the cash budget for the business for the quarter ending March 31, 2024. Your data collection has yielded the following: (i) (ii) (iii) Extracts from the sales and purchases budgets are as follows: Month Sales On Account November 2023 – March 2024 November December January February March Cash Sales $151,100 $480,000 $375,000 $145,500 $600,000 $360,000 $159,025 $700,000 $508,000 $169,350 $650,000 $400,000 $176,200 $800,000 $521,000 Purchases An analysis of the records shows that trade receivables (accounts receivable) are settled according to the following credit pattern, in accordance with the credit terms 2/30, n90: 45% in the month of sale 30% in the first month following the sale. 25% in the second month following the sale. Expected purchases include cash purchases of $28,000 in January and $21, 000 in March. All other purchases are on account. Accounts payable are settled as follows, in accordance with the credit terms 4/30, n60: 75% in the month in which the inventory is purchased. 25% in the following month

of the is a concern and have been given the task of preparing the cash budget for the business for the quarter ending March 31, 2024. Your data collection has yielded the following: (i) (ii) (iii) Extracts from the sales and purchases budgets are as follows: Month Sales On Account November 2023 – March 2024 November December January February March Cash Sales $151,100 $480,000 $375,000 $145,500 $600,000 $360,000 $159,025 $700,000 $508,000 $169,350 $650,000 $400,000 $176,200 $800,000 $521,000 Purchases An analysis of the records shows that trade receivables (accounts receivable) are settled according to the following credit pattern, in accordance with the credit terms 2/30, n90: 45% in the month of sale 30% in the first month following the sale. 25% in the second month following the sale. Expected purchases include cash purchases of $28,000 in January and $21, 000 in March. All other purchases are on account. Accounts payable are settled as follows, in accordance with the credit terms 4/30, n60: 75% in the month in which the inventory is purchased. 25% in the following month

Managerial Accounting: The Cornerstone of Business Decision-Making
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter9: Profit Planning And Flexible Budgets
Section: Chapter Questions
Problem 45BEB: Pilsner Inc. purchases raw materials on account for use in production. The direct materials...
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The business needs to have a sense of its future cashflows and therefore requires the preparation of the following:

1.  A schedule of budgeted cash collections for trade receivables for each of the months January to March.

2.   A schedule of expected cash disbursements for accounts payable for each of the months January to March.

Toyota & Sons is a family-owned auto-parts store. You are the management accountant of the concern and have been given the task of preparing the cash budget for the business for the quarter ending March 31, 2024. Your data collection has yielded the following: (i) (ii) (iii) Extracts from the sales and purchases budgets are as follows: Month Sales On Account November 2023 March 2024 November December January February March Cash Sales $151,100 $480,000 $375,000 $145,500 $600,000 $360,000 $159,025 $700,000 $508,000 $169,350 $650,000 $400,000 $176,200 $800,000 $521,000 Purchases An analysis of the records shows that trade receivables (accounts receivable) are settled according to the following credit pattern, in accordance with the credit terms 2/30, n90: 45% in the month of sale 30% in the first month following the sale. 25% in the second month following the sale. Expected purchases include cash purchases of $28,000 in January and $21, 000 in March. All other purchases are on account. Accounts payable are settled as follows, in accordance with the credit terms 4/30, n60: 75% in the month in which the inventory is purchased. 25% in the following month
Transcribed Image Text:Toyota & Sons is a family-owned auto-parts store. You are the management accountant of the concern and have been given the task of preparing the cash budget for the business for the quarter ending March 31, 2024. Your data collection has yielded the following: (i) (ii) (iii) Extracts from the sales and purchases budgets are as follows: Month Sales On Account November 2023 March 2024 November December January February March Cash Sales $151,100 $480,000 $375,000 $145,500 $600,000 $360,000 $159,025 $700,000 $508,000 $169,350 $650,000 $400,000 $176,200 $800,000 $521,000 Purchases An analysis of the records shows that trade receivables (accounts receivable) are settled according to the following credit pattern, in accordance with the credit terms 2/30, n90: 45% in the month of sale 30% in the first month following the sale. 25% in the second month following the sale. Expected purchases include cash purchases of $28,000 in January and $21, 000 in March. All other purchases are on account. Accounts payable are settled as follows, in accordance with the credit terms 4/30, n60: 75% in the month in which the inventory is purchased. 25% in the following month
(iv) (v) The management of Toyota & Sons is in the process of upgrading its fleet of motor vehicles. During March the company expects to sell an old Cresida motor vehicle that cost $500,000 at a gain of $45,000. Accumulated depreciation on this motor vehicle at that time is expected to be $340,000. The employee will be allowed to pay a deposit equal to 60% of the selling price in March; the balance will be settled in two equal amounts in April & May of 2024. An air conditioning unit, which is estimated to cost $300,000, will be purchased in February. The manager has planned with the suppliers to make a cash deposit of 40% upon signing of the agreement in February. The balance will be settled in four (4) equal monthly instalments beginning March 2024. (vi) A long-term bond purchased by Toyota & Sons 4 years ago, with a face value of $500,000 will mature on January 20, 2024. To meet the financial obligations of the business, management has decided to liquidate the investment upon maturity. On that date quarterly interest computed at a rate of 5%2% per annum is also expected to be collected. (vii) Fixed operating expenses which accrue evenly throughout the year, are estimated to be $2,016,000 per annum, [including depreciation on non-current assets of $42,000 per month] and are settled monthly. (viii) Other operating expenses are expected to be $177,000 per quarter and are settled monthly.
Transcribed Image Text:(iv) (v) The management of Toyota & Sons is in the process of upgrading its fleet of motor vehicles. During March the company expects to sell an old Cresida motor vehicle that cost $500,000 at a gain of $45,000. Accumulated depreciation on this motor vehicle at that time is expected to be $340,000. The employee will be allowed to pay a deposit equal to 60% of the selling price in March; the balance will be settled in two equal amounts in April & May of 2024. An air conditioning unit, which is estimated to cost $300,000, will be purchased in February. The manager has planned with the suppliers to make a cash deposit of 40% upon signing of the agreement in February. The balance will be settled in four (4) equal monthly instalments beginning March 2024. (vi) A long-term bond purchased by Toyota & Sons 4 years ago, with a face value of $500,000 will mature on January 20, 2024. To meet the financial obligations of the business, management has decided to liquidate the investment upon maturity. On that date quarterly interest computed at a rate of 5%2% per annum is also expected to be collected. (vii) Fixed operating expenses which accrue evenly throughout the year, are estimated to be $2,016,000 per annum, [including depreciation on non-current assets of $42,000 per month] and are settled monthly. (viii) Other operating expenses are expected to be $177,000 per quarter and are settled monthly.
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