Paperclip Company's budget committee provides the following information:E (Click the icon to view the information.)Read the requirementsRequirement 1. Prepare the schedule of cash receipts from customers for January and February 2018. Assume cash receipts are 70% in the month of the sale and 30% in the month following the sale.O Requirements- XPaperclip CompanyBudgeted Cash Receipts from CustomersTwo Months Ended February 28, 20181. Prepare the schedule of cash receipts from customers for January andFebruary 2018. Assume cash receipts are 70% in the month of the sale and30% in the month following the sale.2. Prepare the schedule of cash payments for purchases for January andFebruary 2018. Assume purchases are paid 60% in the month of purchaseand 40% in the month following the purchase.3. Prepare the schedule of cash payments for selling and administrativeexpenses for January and February 2018. Assume 40% of the accrual forSalaries and Commissions Payable is for commissions and 60% is forsalaries. The December 31 balance will be paid in January. Salaries andcommissions are paid 70% in the month incurred and 30% in the followingmonth. Rent and income tax expenses are paid as incurred. Insuranceexpense is an expiration of the prepaid amount.4. Prepare the cash budget for January and February 2018. Assume nofinancing took place.JanuaryFebruaryCurrent month sales, 70%Prior month sales, 30%Total cash receiptsRequirement 2. Prepare the schedule of cash payments for purchases for January and February 2018. Assume purchases are paid 60% in the month of purchase and 40% in the month following the purchase.Paperclip CompanyBudgeted Cash Payments for PurchasesTwo Months Ended February 28, 2018JanuaryFebruary40% of last month's purchasesPrintDone60% of current month's purchasesTotal cash payments for purchasesRequirement 3. Prepare the schedule of cash payments for selling and administrative expenses for January and February 2018. Assume 40% of the accrual for Salaries and Commissions Payable is for commissions and 60% is for salaries. The December 31 balance will be paid in January. Salaries andcommissions are paid 70% in the month incurred and 30% in the following month. Rent and income tax expenses are paid as incurred. Insurance expense is an expiration of the prepaid amount. (Round your answers to the nearest whole number.)Paperclip CompanyBudgeted Cash Payments for Selling and Administrative ExpensesTwo Months Ended February 28, 2018JanuaryFebruaryVariable expenses:30% of last month's Commission Expense Paperclip Company's budget committee provides the following information:E (Click the icon to view the information.)Read the requirementsJanuaryFebruaryVariable expenses:30% of last month's Commission Expense70% of current month's Commission ExpenseTotal payments for variable expensesFixed expenses30% of last month's Salaries ExpenseData Table70% of current month's Salaries ExpenseRent expenseDecember 31, 2017, account balances:Total payments for fixed expensesCash23,000Total payments for S and A expensesAccounts Receivable18,000Requirement 4. Prepare the cash budget for January and February 2018. Assume no financing took place.Merchandise Inventory17,000Paperclip CompanyAccounts Payable12,500Cash BudgetSalaries and Commissions Payable2,600Two Months Ended February 28, 2018Budgeted amounts for 2018:JanuaryFebruaryJanuaryFebruarySales, all on account$83,000 $84,100Purchases, all on account40,50041,600Beginning cash balanceCommissions Expense4,1504,205Cash receipts from customersSalaries Expense4.0004.000Cash availableRent Expense2,8002.800Cash payments:Depreciation Expense800800Purchases of merchandise inventoryInsurance Expense200200Selling and administrative expensesIncome Tax Expense1,7001,700Payments for income taxesTotal cash paymentsPrintDoneEnding cash balance

Under cash budget only activities that impact the cash balance are considered.

- X Data Table December 31, 2017, account balances: Cash 23,000 Accounts Receivable 18,000 Merchandise Inventory 17,000 Accounts Payable 12.500 Salaries and Commissions Payable 2.600 Budgeted amounts for 2018: January February Sales, all on account 83,000 S 84,100 Purchases, all on account 40,500 41,600 Commissions Expense 4,150 4,205 Salaries Expense 4,000 4,000 Rent Expense 2,800 2,800 Depreciation Expense 800 800 Insurance Expense 200 200 Income Tax Expense 1,700 1,700 Print Done

- X Data Table December 31, 2017, account balances: Cash 23,000 Accounts Receivable 18,000 Merchandise Inventory 17,000 Accounts Payable 12.500 Salaries and Commissions Payable 2.600 Budgeted amounts for 2018: January February Sales, all on account 83,000 S 84,100 Purchases, all on account 40,500 41,600 Commissions Expense 4,150 4,205 Salaries Expense 4,000 4,000 Rent Expense 2,800 2,800 Depreciation Expense 800 800 Insurance Expense 200 200 Income Tax Expense 1,700 1,700 Print Done

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 20E

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Similar questions

A companys controller is adjusting next years budget to reflect the impact of an expected 3 percent inflation rate. Listed below are selected items from next years budget before the adjustment. After adjusting for the 3 percent inflation rate, what is the companys total budget for the selected items before taxes for next year? a. 858,150 b. 860,412 c. 810,971 d. 858,971
Roman Inc. has the following totals from its operating budgets: Prepare a budgeted income statement for the year ended December 31, 2016, assuming that income from operations is taxed at a rate of 30%.
CASH BUDGETING Helen Bowers, owner of Helens Fashion Designs, is planning to request a line of credit from her bank. She has estimated the following sales forecasts for the firm for parts of 2019 and 2020: Estimates regarding payments obtained from the credit department are as follows: collected within the month of sale, 10%; collected the month following the sale, 75%; collected the second month following the sale, 15%. Payments for labor and raw materials are made the month after these services were provided. Here are the estimated costs of labor plus raw materials: General and administrative salaries are approximately 27,000 a month. Lease payments under long-term leases are 9,000 a month. Depreciation charges are 36,000 a month. Miscellaneous expenses are 2,700 a month. Income tax payments of 63,000 are due in September and December. A progress payment of 180,000 on a new design studio must be paid in October. Cash on hand on July 1 will be 132,000, and a minimum cash balance of 90,000 should be maintained throughout the cash budget period. a. Prepare a monthly cash budget for the last 6 months of 2019. b. Prepare monthly estimates of the required financing or excess fundsthat is, the amount of money Bowers will need to borrow or will have available to invest. c. Now suppose receipts from sales come in uniformly during the month (that is, cash receipts come in at the rate of 1/30 each day), but all outflows must be paid on the 5th. Will this affect the cash budget? That is, will the cash budget you prepared be valid under these assumptions? If not, what could be done to make a valid estimate of the peak financing requirements? No calculations are required, although if you prefer, you can use calculations to illustrate the effects. d. Bowers sales are seasonal, and her company produces on a seasonal basis, just ahead of sales. Without making any calculations, discuss how the companys current and debt ratios would vary during the year if all financial requirements were met with short-term bank loans. Could changes in these ratios affect the firms ability to obtain bank credit? Explain.
Echo Amplifiers prepared the following sales budget for the first quarter of 2018: It also has this additional information related to its expenses: Prepare a sales and administrative expense budget for each month in the quarter ending March 31, 2018.
Pilsner Inc. purchases raw materials on account for use in production. The direct materials purchases budget shows the following expected purchases on account: Pilsner typically pays 25% on account in the month of billing and 75% the next month. Required: 1. How much cash is required for payments on account in May? 2. How much cash is expected for payments on account in June?
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?
Cash budget The controller of Mercury Shoes 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, 60% are expected to be collected in the month following the sale and the remainder the following month (second month after sale). Depreciation, insurance, and property tax expense represent 12,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in February, and the annual property taxes are paid in November. 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 June 1 include cash of 42,000, marketable securities of 25,000, and accounts receivable of 198,000 (150,000 from May sales and 48,000 from April sales). Sales on account in April and May were 120,000 and 150,000, respectively. Current liabilities as of June 1 include 13,000 of accounts payable incurred in May for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of 24,000 will be made in July. Mercury Shoes regular quarterly dividend of 15,000 is expected to be declared in July and paid in August. Management desires to maintain a minimum cash balance of 40,000. Instructions Prepare a monthly cash budget and supporting schedules for June, July, and August. On the basis of the cash budget prepared in part (1), what recommendation should be made to the controller?
Budgeted selling and administrative expenses for King Tire Co. In P7-2 for the year ended December 31, 2016, were as follows: Required: 1. Prepare a selling and administrative expense budget, in good form, for the year 2016. 2. Using the information above and the budgets prepared in P7-2, prepare a budgeted income statement for the year 2016, assuming an income tax rate of 40%.
Budgeted income statement and supporting budgets The budget director of Birding Homes Feeders Inc., with the assistance of the controller, treasurer, production manager, and sales manager, has gathered the following data for use in developing the budgeted income statement for January: Estimated sales for January: Estimated inventories at January 1: Desired inventories at January 31: Direct materials used in production: Anticipated cost of purchases and beginning and ending inventory of direct materials: Direct labor requirements: Estimated factory overhead costs for January: Estimated operating expenses for January: Estimated other revenue and expense for January: Estimated tax rate: 25% Instructions Prepare a sales budget for January. Prepare a production budget for January. Prepare a direct materials purchases budget for January. Prepare a direct labor cost budget for January. Prepare a factory overhead cost budget for January. Prepare a cost of goods sold budget for January. Work in process at the beginning of January is estimated to be 9,000, and work in process at the end of January is estimated to be 10,500. Prepare a selling and administrative expenses budget for January. Prepare a budgeted income statement for January.
Budgeted income statement and balance sheet As a preliminary to requesting budget estimates of sales, costs, and expenses for the fiscal year beginning January 1, 20Y9, the following tentative trial balance as of December 31, 20Y8, is prepared by the Accounting Department of Mesa Publishing Co.: Factory output and sales for 20Y9 are expected to total 3,800 units of product, which are to be sold at 120 per unit. The quantities and costs of the inventories at December 31, 20Y9, are expected to remain unchanged from the balances at the beginning of the year. Budget estimates of manufacturing costs and operating expenses for the year are summarized as follows: Balances of accounts receivable, prepaid expenses, and accounts payable at the end of the year are not expected to differ significantly from the beginning balances. Federal income tax of 35,000 on 20Y9 taxable income will be paid during 20Y9. Regular quarterly cash dividends of 0.20 per share are expected to be declared and paid in March, June, September, and December on 20,000 shares of common stock outstanding. It is anticipated that fixed assets will be purchased for 22,000 cash in May. Instructions Prepare a budgeted income statement for 20Y9. Prepare a budgeted balance sheet as of December 31, 20Y9, with supporting calculations.
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?
Cash Budget The controller of Feinberg Company is gathering data to prepare the cash budget for July. He plans to develop the budget from the following information: a. Of all sales, 40% are cash sales. b. Of credit sales, 45% are collected within the month of sale. Half of the credit sales collected within the month receive a 2% cash discount (for accounts paid within 10 days). Thirty percent of credit sales are collected in the following month; remaining credit sales are collected the month thereafter. There are virtually no bad debts. c. Sales for the second two quarters of the year follow. (Note: The first 3 months are actual sales, and the last 3 months are estimated sales.) d. The company sells all that it produces each month. The cost of raw materials equals 26% of each sales dollar. The company requires a monthly ending inventory of raw materials equal to the coming months production requirements. Of raw materials purchases, 50% is paid for in the month of purchase. The remaining 50% is paid for in the following month. e. Wages total 105,000 each month and are paid in the month incurred. f. Budgeted monthly operating expenses total 376,000, of which 45,000 is depreciation and 6,000 is expiration of prepaid insurance (the annual premium of 72,000 is paid on January 1). g. Dividends of 130,000, declared on June 30, will be paid on July 15. h. Old equipment will be sold for 25,200 on July 4. i. On July 13, new equipment will be purchased for 173,000. j. The company maintains a minimum cash balance of 20,000. k. The cash balance on July 1 is 27,000. Required: Prepare a cash budget for July. Give a supporting schedule that details the cash collections from sales.