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The company has received a large order and anticipates the need to go to the bank to increase its borrowings. As a result, it has to forecast its cash requirement to January, February and March. Typically, the company collects 20 percent of its sales in the month of sale, 70 percent in the subsequent month, and 10 percent in the second month after the sale. All sales are credit sales. Accounts Payable (0008) Cash 360 50 Notes Payable 530 Accrued Expenses 545 Current Liabilities 1125 400 Accounts Receivable 212 Inventories 972 Long term Liabilities Total Liabilities Current Assets 450 1422 Non-current Assets 1836 Common Stocks 100 Retained Earnings Total Liabilities & Shareholder's Equity 1439 2961 Total Assets 2961 Purchase of raw materials are made in the month prior to the sale and amount to 60 percent of sales in the subsequent month. Payments for these purchases occur in the month after the purchase. Labor costs, including overtime, are expected to be P150,000 in January, P200,000 in February, and P160,000 in March. Selling, administrative, taxes and other cash expenses are expected to be P100,000 per month for January to March. Actual Sales in November and December and projected sales for January through April are as follows: (000s) November P500 February March P1,000 December P600 P650 January P600 April P750 Required Taking into consideration that the firm wants to maintain a cash balance of P50,000 at all times, prepare the following: 1. Cash Budget for the months of January, February and March 2. Pro-forma Income Statements for the three-month period 3. Pro-forma Statement of Financial Position as of March 31 4. Pro-forma Statement of Cash Flows dated March 31

The company has received a large order and anticipates the need to go to the bank to increase its borrowings. As a result, it has to forecast its cash requirement to January, February and March. Typically, the company collects 20 percent of its sales in the month of sale, 70 percent in the subsequent month, and 10 percent in the second month after the sale. All sales are credit sales. Accounts Payable (0008) Cash 360 50 Notes Payable 530 Accrued Expenses 545 Current Liabilities 1125 400 Accounts Receivable 212 Inventories 972 Long term Liabilities Total Liabilities Current Assets 450 1422 Non-current Assets 1836 Common Stocks 100 Retained Earnings Total Liabilities & Shareholder's Equity 1439 2961 Total Assets 2961 Purchase of raw materials are made in the month prior to the sale and amount to 60 percent of sales in the subsequent month. Payments for these purchases occur in the month after the purchase. Labor costs, including overtime, are expected to be P150,000 in January, P200,000 in February, and P160,000 in March. Selling, administrative, taxes and other cash expenses are expected to be P100,000 per month for January to March. Actual Sales in November and December and projected sales for January through April are as follows: (000s) November P500 February March P1,000 December P600 P650 January P600 April P750 Required Taking into consideration that the firm wants to maintain a cash balance of P50,000 at all times, prepare the following: 1. Cash Budget for the months of January, February and March 2. Pro-forma Income Statements for the three-month period 3. Pro-forma Statement of Financial Position as of March 31 4. Pro-forma Statement of Cash Flows dated March 31

Managerial Accounting
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 17E
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The Balance Sheet of Lopez Agri-ventures, Inc. at December 31 is shown below. The company has received a large order and anticipates the need to go to the bank to increase its borrowings. As a result, it has to forecast its cash requirement to January, February and March. Typically, the company collects 20 percent of its sales in the month of sale, 70 percent in the subsequent month, and 10 percent in the second month after the sale. All sales are credit sales. (000s) Cash Accounts Payable 50 Notes Payable 530 Accrued Expenses 545 360 400 Accounts Receivable 212 Inventories Current Liabilities 972 Current Assets 1125 Long-term Liabilities Total Liabilities 450 1422 Non-current Assets 1836 Common Stocks 100 Retained Earnings Total Liabilities & Shareholder's Equity 1439 2961 Total Assets 2961 Purchase of raw materials are made in the month prior to the sale and amount to 60 percent of sales in the subsequent month. Payments for these purchases occur in the month after the purchase. Labor costs, including overtime, are expected to be P150,000 in January, P200,000 in February, and P160,000 in March. Selling, administrative, taxes and other cash expenses are expected to be P100,000 per month for January to March. Actual Sales in November and December and projected sales for January through April are as follows: ('000s) November P500 February P1,000 December P600 March P650 January P600 April P750 Required: Taking into consideration that the firm wants to maintain a cash balance of P50,000 at all times, prepare the following 1. Cash Budget for the months of January, February and March 2. Pro-forma Income Statements for the three-month period 3. Pro-forma Statement of Financial Position as of March 31 4. Pro-forma Statement of Cash Flows dated March 31
Transcribed Image Text:The Balance Sheet of Lopez Agri-ventures, Inc. at December 31 is shown below. The company has received a large order and anticipates the need to go to the bank to increase its borrowings. As a result, it has to forecast its cash requirement to January, February and March. Typically, the company collects 20 percent of its sales in the month of sale, 70 percent in the subsequent month, and 10 percent in the second month after the sale. All sales are credit sales. (000s) Cash Accounts Payable 50 Notes Payable 530 Accrued Expenses 545 360 400 Accounts Receivable 212 Inventories Current Liabilities 972 Current Assets 1125 Long-term Liabilities Total Liabilities 450 1422 Non-current Assets 1836 Common Stocks 100 Retained Earnings Total Liabilities & Shareholder's Equity 1439 2961 Total Assets 2961 Purchase of raw materials are made in the month prior to the sale and amount to 60 percent of sales in the subsequent month. Payments for these purchases occur in the month after the purchase. Labor costs, including overtime, are expected to be P150,000 in January, P200,000 in February, and P160,000 in March. Selling, administrative, taxes and other cash expenses are expected to be P100,000 per month for January to March. Actual Sales in November and December and projected sales for January through April are as follows: ('000s) November P500 February P1,000 December P600 March P650 January P600 April P750 Required: Taking into consideration that the firm wants to maintain a cash balance of P50,000 at all times, prepare the following 1. Cash Budget for the months of January, February and March 2. Pro-forma Income Statements for the three-month period 3. Pro-forma Statement of Financial Position as of March 31 4. Pro-forma Statement of Cash Flows dated March 31
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