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The following data relate to the operations of Picanuy Corporation, a wholesale distributor of consumer goods: C. d. Current assets as of December 31: Cash Accounts receivable Inventory.. a. The gross margin is 30% of sales. (In other words, cost of goods sold is 70% of sales.) b. Actual and budgeted sales data are as follows: e. Buildings and equipment, net. Accounts payable Capital stock. Retained earnings. December (actual). January. February $6,000 $36,000 $9,800 $110,885 $32,550 $100,000. $30,135 March April $60,000 $70,000 $80,000 $85,000 $55,000 Sales are 40% for cash and 60% on credit. Credit sales are collected in the month following sale. The accounts receivable at December 31 are the result of December credit sales. Each month's ending inventory should equal 20% of the following month's budgeted cost of goods sold. One-quarter of a month's inventory purchases is paid for in the month of purchase; the other three-quarters is paid for in the following month. The accounts payable at December 31 are the result of December purchases of inventory. h. f. Monthly expenses are as follows: commissions, $12,000; rent, $1,800; other expenses (exclud- ing depreciation), 8% of sales. Assume that these expenses are paid monthly. Depreciation is $2,400 for the quarter and includes depreciation on new assets acquired during the quarter. g. Equipment will be acquired for cash: $3,000 in January and $8,000 in February. Management would like to maintain a minimum cash balance of $5,000 at the end of each month. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $50,000. The interest rate on these loans is 1% per month, and for simplicity, we will assume that inter- est is not compounded. The company would, as far as it is able, repay the loan plus accumu- lated interest at the end of the quarter.

The following data relate to the operations of Picanuy Corporation, a wholesale distributor of consumer goods: C. d. Current assets as of December 31: Cash Accounts receivable Inventory.. a. The gross margin is 30% of sales. (In other words, cost of goods sold is 70% of sales.) b. Actual and budgeted sales data are as follows: e. Buildings and equipment, net. Accounts payable Capital stock. Retained earnings. December (actual). January. February $6,000 $36,000 $9,800 $110,885 $32,550 $100,000. $30,135 March April $60,000 $70,000 $80,000 $85,000 $55,000 Sales are 40% for cash and 60% on credit. Credit sales are collected in the month following sale. The accounts receivable at December 31 are the result of December credit sales. Each month's ending inventory should equal 20% of the following month's budgeted cost of goods sold. One-quarter of a month's inventory purchases is paid for in the month of purchase; the other three-quarters is paid for in the following month. The accounts payable at December 31 are the result of December purchases of inventory. h. f. Monthly expenses are as follows: commissions, $12,000; rent, $1,800; other expenses (exclud- ing depreciation), 8% of sales. Assume that these expenses are paid monthly. Depreciation is $2,400 for the quarter and includes depreciation on new assets acquired during the quarter. g. Equipment will be acquired for cash: $3,000 in January and $8,000 in February. Management would like to maintain a minimum cash balance of $5,000 at the end of each month. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $50,000. The interest rate on these loans is 1% per month, and for simplicity, we will assume that inter- est is not compounded. The company would, as far as it is able, repay the loan plus accumu- lated interest at the end of the quarter.

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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Solve these two problems with data given - please provide instructions on answers
Schedule of Expected Cash Disbursements Merchandise Purchases January February March Quarter December purchases.. January purchases. February purchases. March purchases. Total disbursements. *Beginning balance of the accounts.payable. $32,550* 12,600 $37,800 Commissions Rent. Other expenses Total disbursements $45,150 3. Complete the following schedule: Schedule of Expected Cash Disbursements Selling and Administrative Expenses February March Quarter January $32,550 50,400 $12,000 1,800 5,600 $19,400
Transcribed Image Text:Schedule of Expected Cash Disbursements Merchandise Purchases January February March Quarter December purchases.. January purchases. February purchases. March purchases. Total disbursements. *Beginning balance of the accounts.payable. $32,550* 12,600 $37,800 Commissions Rent. Other expenses Total disbursements $45,150 3. Complete the following schedule: Schedule of Expected Cash Disbursements Selling and Administrative Expenses February March Quarter January $32,550 50,400 $12,000 1,800 5,600 $19,400
The following data relate to the operations of Picanuy Corporation, a wholesale distributor of consumer goods: a. b. C. d. e. f. g. h. Current assets as of December 31: Cash. Accounts receivable Inventory.. Buildings and equipment, net. Accounts payable Capital stock.. Retained earnings. $6,000 $36,000 $9,800 $110,885 $32,550. $100,000. $30,135 The gross margin is 30% of sales. (In other words, cost of goods sold is 70% of sales.) Actual and budgeted sales data are as follows: December (actual). January. February.. March.. April $60,000 $70,000 $80,000 $85,000 $55,000. Sales are 40% for cash and 60% on credit. Credit sales are collected in the month following sale. The accounts receivable at December 31 are the result of December credit sales. Each month's ending inventory should equal 20% of the following month's budgeted cost of goods sold. One-quarter of a month's inventory purchases is paid for in the month of purchase; the other three-quarters is paid for in the following month. The accounts payable at December 31 are the result of December purchases of inventory. Monthly expenses are as follows: commissions, $12,000; rent, $1,800; other expenses (exclud- ing depreciation), 8% of sales. Assume that these expenses are paid monthly. Depreciation is $2,400 for the quarter and includes depreciation on new assets acquired during the quarter. Equipment will be acquired for cash: $3,000 in January and $8,000 in February. Management would like to maintain a minimum cash balance of $5,000 at the end of each month. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $50,000. The interest rate on these loans is 1% per month, and for simplicity, we will assume that inter- est is not compounded. The company would, as far as it is able, repay the loan plus accumu- lated interest at the end of the quarter. moth
Transcribed Image Text:The following data relate to the operations of Picanuy Corporation, a wholesale distributor of consumer goods: a. b. C. d. e. f. g. h. Current assets as of December 31: Cash. Accounts receivable Inventory.. Buildings and equipment, net. Accounts payable Capital stock.. Retained earnings. $6,000 $36,000 $9,800 $110,885 $32,550. $100,000. $30,135 The gross margin is 30% of sales. (In other words, cost of goods sold is 70% of sales.) Actual and budgeted sales data are as follows: December (actual). January. February.. March.. April $60,000 $70,000 $80,000 $85,000 $55,000. Sales are 40% for cash and 60% on credit. Credit sales are collected in the month following sale. The accounts receivable at December 31 are the result of December credit sales. Each month's ending inventory should equal 20% of the following month's budgeted cost of goods sold. One-quarter of a month's inventory purchases is paid for in the month of purchase; the other three-quarters is paid for in the following month. The accounts payable at December 31 are the result of December purchases of inventory. Monthly expenses are as follows: commissions, $12,000; rent, $1,800; other expenses (exclud- ing depreciation), 8% of sales. Assume that these expenses are paid monthly. Depreciation is $2,400 for the quarter and includes depreciation on new assets acquired during the quarter. Equipment will be acquired for cash: $3,000 in January and $8,000 in February. Management would like to maintain a minimum cash balance of $5,000 at the end of each month. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $50,000. The interest rate on these loans is 1% per month, and for simplicity, we will assume that inter- est is not compounded. The company would, as far as it is able, repay the loan plus accumu- lated interest at the end of the quarter. moth
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why did you multiple required purchases by 1/4 & 3/4? I am confused on this as i dont see it in the instructions. 

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