Advanced Financial Management (Custom Package)
17th Edition
ISBN: 9781323539439
Author: LOYOLA UNIV.
Publisher: PEARSON
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Textbook Question
Chapter 4, Problem 4.9P
Learning Goal 4
P4-10 Cash budget: Basic Grenoble Enterprises had sales of $50,000 in March and $60,000 in April
- 1. The firm makes 20% of sales for cash, 60% are collected in the next month, and the remaining 20% are collected in the second month following sale.
- 2. The firm receives other income of $2,000 per month.
- 3. The firm’s actual or expected purchases, all made for cash, are $50,000, $70,000, and $80,000 for the months of May through July, respectively.
- 4. Rent is $3,000 per month.
- 5. Wages and salaries are 10% of the previous month's sales.
- 6. Cash dividends of $3,000 will be paid in June.
- 7. Payment of principal and interest of $4,000 is due in June.
- 8. A cash purchase of equipment costing $6,000 is scheduled in July.
- 9. Taxes of $6,000 are due in June.
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Management Accounting
Course Project – Part 1, B Group
The Terranova Company is preparing information to complete its master budget for the quarter ending December 31, 2020. The company intends to make unit sales in the related months as follows:
September 5,000
October 9,750
November 11,700
December 14,625
Units are to be sold for $10 each. Sales are 60% for cash and 40% on credit. Credit sales are collected in the month following the sale.
*Required:
1) Prepare a sales budget for Terranova for the quarter ending December 31, 2020. Show activity by month and in total. (Hint: a quarter = 3 months.)
2) Complete a schedule of expected cash collections for the quarter ending December 31, 2020. Show activity by month and in total.
(Learning Objective 5: Use the COGS model to make management decisions)Spicer Industries prepares budgets to help manage the company. Spicer is budgeting forthe fiscal year ended January 31, 2018. During the preceding year ended January 31, 2017,sales totaled $9,700 million and cost of goods sold was $6,400 million. At January 31, 2017,inventory was $1,500 million. During the upcoming 2018 year, suppose Spicer expects costof goods sold to increase by 12%. The company budgets next year’s ending inventory at$1,800 million.Requirement1. One of the most important decisions a manager makes is how much inventory to buy. Howmuch inventory should Spicer purchase during the upcoming year to reach its budget?
5. Question Content Area
Cash Budget
Janet Wooster owns a retail store that sells new and used sporting equipment. Janet has requested a cash budget for October. After examining the records of the company, you find the following:
Cash balance on October 1 is $1,110.
Actual sales for August and September are as follows:
August
September
Cash sales
$6,000
$4,500
Credit sales
59,000
61,000
Total sales
$65,000
$65,500
Credit sales are collected over a three-month period: 40 percent in the month of sale, 36 percent in the next month, and 22 percent in the second month after the sale. The remaining sales are uncollectible.
Inventory purchases average 70 percent of a month’s total sales. Of those purchases, 45 percent are paid for in the month of purchase. The remaining 55 percent are paid for in the following month.
Salaries and wages total $3,850 per month.
Rent is $3,150 per month.
Taxes to be paid in October are $1,635.
Janet…
Chapter 4 Solutions
Advanced Financial Management (Custom Package)
Ch. 4.1 - Briefly describe the first four modified...Ch. 4.1 - Describe the overall cash flow through the firm in...Ch. 4.1 - Prob. 4.3RQCh. 4.1 - 4-B Why is depreciation (as well as amortization...Ch. 4.1 - Prob. 4.5RQCh. 4.1 - Prob. 4.6RQCh. 4.1 - Prob. 4.7RQCh. 4.2 - Prob. 4.8RQCh. 4.2 - Prob. 4.9RQCh. 4.3 - Prob. 4.10RQ
Ch. 4.3 - Prob. 4.11RQCh. 4.3 - Prob. 4.12RQCh. 4.3 - What is the cause of uncertainty in the cash...Ch. 4.4 - Prob. 4.14RQCh. 4.5 - Prob. 4.15RQCh. 4.5 - Prob. 4.16RQCh. 4.6 - Prob. 4.17RQCh. 4.6 - What is the significance of the plug figure,...Ch. 4.7 - Prob. 4.19RQCh. 4.7 - Prob. 4.20RQCh. 4 - Opener-in-Review The chapter opener described a...Ch. 4 - Learning Goals 2, 3 ST4-1 Depreciation and cash...Ch. 4 - Prob. 4.2STPCh. 4 - Prob. 4.3STPCh. 4 - Prob. 4.1WUECh. 4 - Prob. 4.2WUECh. 4 - Learning Goal 3 E4-3 Determine the operating cash...Ch. 4 - Prob. 4.4WUECh. 4 - Prob. 4.5WUECh. 4 - Prob. 4.1PCh. 4 - Prob. 4.2PCh. 4 - Prob. 4.3PCh. 4 - Learning Goals 2, 3 P4-4 Depreciation and...Ch. 4 - Learning Goal 3 P4-5 Classifying inflows and...Ch. 4 - Prob. 4.6PCh. 4 - Learning Goal 4 P4-8 Cash receipts A firm has...Ch. 4 - Learning Goal 4 P4-9 Cash disbursements schedule...Ch. 4 - Learning Goal 4 P4-10 Cash budget: Basic Grenoble...Ch. 4 - Prob. 4.10PCh. 4 - Prob. 4.11PCh. 4 - Prob. 4.12PCh. 4 - Prob. 4.13PCh. 4 - Learning Goal 4 P4-15 Multiple cash budgets:...Ch. 4 - Prob. 4.15PCh. 4 - Prob. 4.16PCh. 4 - Prob. 4.17PCh. 4 - Prob. 4.18PCh. 4 - Prob. 4.19PCh. 4 - Prob. 4.20PCh. 4 - Prob. 4.21PCh. 4 - Prob. 1SE
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