Problem 1. Jane McDonald, a financial analyst for Carroll Company, has prepared the following sales and cashdisbursement estimates for the period February to June of the current year.CashdisbursementsMonthSalesFebruary$500$400March600300April400600May200500June200200McDonald notes that historically, 30% of sales have been for cash. Of credit sales, 70% are collected 1 month after thesale, and the remaining 30% are collected 2 months after the sale. The firm wishes to maintain a minimum endingbalance in its cash account of $25. Balances above this amount would be invested in short-term government securities(marketable securities), whereas any deficits would be financed through short-term bank borrowing (notes payable).The beginning cash balance at April 1 is $115.a. Prepare cash budgets for April, May, and June.b.How much financing, if any, at a maximum would Carroll Company require to meet its obligations during this3-month period?c. A pro forma balance sheet dated at the end of June is to be prepared from the information presented. Givethe size of each of the following: cash, notes payable, marketable securities, and accounts receivable.

A cash budget is a budget prepared to know the cash receipts, payments, and ending cash balance for…

Answered: Problem 1. Jane McDonald, a financial…

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

Chapter21: Cash Budgeting (cashbud)

Section: Chapter Questions

Problem 1R: On January 1, Sweet Pleasures, Inc., begins business. The company has 14,000 cash on hand and is...

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Cash collections for Renew Lights found that 65% of sales were collected in the month of sale, 25% was collected the month after the sale, and 10% was collected the second month after the sale. Given the sales shown, how much cash will be collected in March and April?
Historically, Ragman Company has had no significant bad debt experience with its customers. Cash sales have accounted for 20 percent of total sales, and payments for credit sales have been received as follows: 40 percent of credit sales in the month of the sale 35 percent of credit sales in the first subsequent month 20 percent of credit sales in the second subsequent month 5 percent of credit sales in the third subsequent month The forecast for both cash and credit sales is as follows. Required: 1. What is the forecasted cash inflow for Ragman Company for May? 2. Due to deteriorating economic conditions, Ragman Company has now decided that its cash forecast should include a bad debt adjustment of 2 percent of credit sales, beginning with sales for the month of April. Because of this policy change, what will happen to the total expected cash inflow related to sales made in April? (CMA adapted)
Halifax Shoes has 30% of its sales in cash and the remainder on credit. Of the credit sales, 65% is collected in the month of sale, 25% is collected the month after the sale, and 5% is collected the second month after the sale. How much cash will be collected in August if sales are estimated as $75,000 in June, $65,000 in July, and $90,000 in August?
Earthies Shoes has 55% of its sales in cash and the remainder on credit. Of the credit sales, 70% is collected in the month of sale, 15% is collected the month after the sale, and 10% is collected the second month after the sale. How much cash will be collected in June if sales are estimated as $75,000 in April, $65,000 in May, and $90,000 in June?
My Aunts Closet Store collects 60% of its accounts receivable in the month of sale and 35% in the month after the sale. Given the following sales, how much cash will be collected in March?
Ranger Industries has provided the following information at June 30: Other information: Average selling price, 196 Average purchase price per unit, 110 Desired ending inventory, 40% of next months unit sales Collections from customers: In month of sale20% In month after sale50% Two months after sale30% Projected cash payments: Inventory purchases are paid for in the month following acquisition. Variable cash expenses, other than inventory, are equal to 25% of each months sales and are paid in the month of sale. Fixed cash expenses are 40,000 per month and are paid in the month incurred. Depreciation on equipment is 2,000 per month. REQUIREMENT You have been asked to prepare a master budget for the upcoming quarter (July, August, and September). The components of this budget are a monthly sales budget, a monthly purchases budget, a monthly cash budget, a forecasted income statement for the quarter, and a forecasted September 30 balance sheet. The worksheet MASTER has been provided to assist you. Ranger Industries desires to maintain a minimum cash balance of 8,000 at the end of each month. If this goal cannot be met, the company borrows the exact amount needed to reach its goal. If the company has a cash balance greater than 8,000 and also has loans payable outstanding, the amount in excess of 8,000 is paid to the bank. Annual interest of 18% is paid on a monthly basis on the outstanding balance.
Del Spencer is the owner and founder of Del Spencers Mens Clothing Store. Del Spencers has its own house charge accounts and has found from past experience that 10 percent of its sales are for cash. The remaining 90 percent are on credit. An aging schedule for accounts receivable reveals the following pattern: 15 percent of credit sales are paid in the month of sale. 65 percent of credit sales are paid in the first month following the sale. 14 percent of credit sales are paid in the second month following the sale. 6 percent of credit sales are never collected. Credit sales that have not been paid until the second month following the sale are considered overdue and are subject to a 3 percent late charge. Del Spencers has developed the following sales forecast: Required: Prepare a schedule of cash receipts for August and September.
Nonnas Re-Appliance Store collects 55% of its accounts receivable in the month of sale and 40% in the month after the sale. Given the following sales, how much cash will be collected in February?
Cash collections for Wax On Candles found that 60% of sales were collected in the month of the sale, 30% was collected the month after the sale, and 10% was collected the second month after the sale. Given the sales shown, how much cash will be collected in January and February?
On January 1, Sweet Pleasures, Inc., begins business. The company has 14,000 cash on hand and is attempting to project cash receipts and disbursements through April 30. On May 1, a note payable of 10,000 will be due. This amount was borrowed on January 1 to carry the company through its first four months of operation. The unit purchase cost of the companys single product, a box of Sweet Pleasures chocolates, is 12. The unit sales price is 28. Projected purchases and sales in units for the first four months are: Sales terms call for a 5% discount if paid within the same month that the sale occurred. It is expected that 50% of the billings will be collected within the discount period, 25% by the end of the month after purchase, 19% in the following month, and 6% will be uncollectible. Approximately 60% of the purchases are paid for in the month purchased. The rest are due and payable in the next month. Total fixed marketing and administrative expenses for each month include cash expenses of 5,000 and depreciation on equipment of 2,000. Variable marketing and administrative expenses total 6 per unit sold. All marketing and administrative expenses are paid as incurred. REQUIREMENT You have been asked to prepare a cash budget for the next four months to see if the loan can be repaid. Review the worksheet CASHBUD that follows these requirements. The problem data have already been entered in the Data Section of the worksheet.
Fitbands estimated sales are: What are the balances in accounts receivable for January, February, and March if 65% of sales is collected in the month of sale, 25% is collected the month after the sale, and 10% is second month after the sale?

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