Swenson, Inc. sells tire rims. Its sales budget for the nine months ended September 30, 2024, and additional information follow: (Click the icon to view the budget) (Click the icon to view additional information) Prepare an inventory, purchases, and cost of goods sold budget for each of the first three quarters of the year. Compute cost of goods sold for the entire nine-month period More info Swenson, Inc. Inventory, Purchases, and Cost of Goods Sold Budget Nine Months Ended September 30, 2024 - X In the past, cost of goods sold has been 40% of total sales. The director of marketing and the financial vice president agree that each quarter's ending inventory should not be below $8,000 plus 10% of cost of goods sold for the following quarter. The marketing director expects sales of $245,000 during the fourth quarter. The January 1 inventory was $35,000 www. Data table Cash sales, 20% Credit sales, 80% Total sales $ $ Quarter Ended June 30 39,000 $ 156,000 195,000 $ March 31 29,000 $ 116,000 145,000 $ September 30 34,000 $ 136,000 170,000 $ Nine-Month Total - 102,000 408,000 510,000

Swenson, Inc. sells tire rims. Its sales budget for the nine months ended September 30, 2024, and additional information follow: (Click the icon to view the budget) (Click the icon to view additional information) Prepare an inventory, purchases, and cost of goods sold budget for each of the first three quarters of the year. Compute cost of goods sold for the entire nine-month period More info Swenson, Inc. Inventory, Purchases, and Cost of Goods Sold Budget Nine Months Ended September 30, 2024 - X In the past, cost of goods sold has been 40% of total sales. The director of marketing and the financial vice president agree that each quarter's ending inventory should not be below $8,000 plus 10% of cost of goods sold for the following quarter. The marketing director expects sales of $245,000 during the fourth quarter. The January 1 inventory was $35,000 www. Data table Cash sales, 20% Credit sales, 80% Total sales $ $ Quarter Ended June 30 39,000 $ 156,000 195,000 $ March 31 29,000 $ 116,000 145,000 $ September 30 34,000 $ 136,000 170,000 $ Nine-Month Total - 102,000 408,000 510,000

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter8: Budgeting

Section: Chapter Questions

Problem 5PA: Cash budget The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash...

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Cash budget 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: 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 represent 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. Bridgeports 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 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?
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