(1)
Concept introduction:
Money (cash)
To prepare:
Table showing cash collected through credit sales (balance due) in June and July.
Answer to Problem 7PSA
Particulars | April $ | May $ | June $ | July $ | August $ |
Collection made | 144000 | 432000 | 597600 | 820800 | 889200 |
Explanation of Solution
Table of collection through Money(cash)
Particulars | April $ | May $ | June $ | July $ | August $ |
Sales | 720000 | 360000 | 1080000 | 900000 | 684000 |
Collection made |
(2)
Concept introduction:
Money (cash) forecast: Money (cash) acceptance forecast amounts to the outflow and inflow of money (cash) in the forecast period to ascertain the equilibrium of money (cash) commitment.
To prepare:
Budget inventory (ending) for April, May, June and July.
Answer to Problem 7PSA
Particulars | April $ | May $ | June $ | July $ |
Closing inventory | 400 | 1200 | 1000 | 760 |
Explanation of Solution
Computation of forecasted (budgeted) closing stock for April, May, June, and July.
Particulars | April $ | May $ | June $ | July $ | August $ |
Unit | 4000 | 2000 | 6000 | 5000 | 3800 |
Closing inventory(20*of succeeding month sales) | 400 | 1200 | 1000 | 760 | - |
(3)
Concept introduction:
Money (cash) forecast: Money (cash) acceptance forecast amounts to the outflow and inflow of money (cash) in the forecast period to ascertain the equilibrium of money (cash) commitment.
To prepare:
Purchase budget for May, June and July.
Answer to Problem 7PSA
Particulars | April $ | May $ | June $ | July $ |
Units to be bought | 4500 | 2900 | 5900 | 4860 |
Explanation of Solution
Purchase forecast (budget):
Particulars | April $ | May $ | June $ | July $ | August $ |
Units | 4000 | 2000 | 6000 | 5000 | 3800 |
Less-beginning inventory | - | 400 | 1200 | 1000 | 760 |
Add-ending inventory | 400 | 1200 | 1000 | 760 | - |
Add-stock for safety | 100 | 100 | 100 | 100 | 100 |
Units to be bought | 4500 | 2900 | 5900 | 4860 | 3140 |
(4)
Concept introduction:
Money (cash) forecast: Money (cash) acceptance forecast amounts to the outflow and inflow of money (cash) in the forecast period to ascertain the equilibrium of money (cash) commitment.
To prepare:
Table showing cash payment in June and July.
Answer to Problem 7PSA
Months | June$ | July$ |
Amount | 484000 | 594000 |
Explanation of Solution
Cash schedule for payment
Particulars | April$ | May$ | June$ | July$ | August$ |
Unit | 4000 | 2000 | 6000 | 5000 | 3800 |
Price /unit | 110 | 110 | 110 | 110 | 110 |
Purchase | 440000 | 220000 | 660000 | 550000 | 418000 |
Amount |
(5)
Concept introduction:
Money (cash) forecast: Money (cash) acceptance forecast amounts to the outflow and inflow of money (cash) in the forecast period to ascertain the equilibrium of money (cash). commitment.
To prepare:
Answer to Problem 7PSA
Total of cash in June and July is same i.e. 100000
Explanation of Solution
Cash budget
Particulars | June | July |
Cash received | 597600 | 820800 |
Less-cash paid | 660000 | 550000 |
Less-expenses for sales | 1320000 | |
Amount for loan | 1382400 | 1377488 |
Less-interest paid amount | - | 1658888 |
Cash | 100000 | 100000 |
(6)
Concept introduction:
Money (cash) forecast: Money (cash) acceptance forecast amounts to the outflow and inflow of money (cash) in the forecast period to ascertain the equilibrium of money (cash) commitment.
To discuss:
Reasons that would help the firm manage cash for the month of May.
Answer to Problem 7PSA
If it was known to the company that it required more borrowing in June, i.e., more than $18000 as per the cash budget of the company in May itself, then company would have made less investment in May so that borrowing would have not been required that much in June. Also, the company would have realised its amount receivable from the customer to whom credit sales has been made.
Explanation of Solution
If it was known to the company that it required more borrowing in June, i.e., more than $18000 as per the cash budget of the company in May itself, then the company would have made less investment in May so that the borrowing would have not been required that much in June. Also, the company would have realised its amount receivable from the customer to whom credit sales has been made.
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Chapter 7 Solutions
Connect 1 Semester Access Card For Managerial Accounting
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