Concept explainers
Concept introduction:
The
Requirement 1
The amount of cash receipt for the month of July and August.
Concept introduction:
The cash receipt budget is prepared by the company to estimate the budgeted amount of cash sales and cash to be received from the customers during a particular period. The cash payment budget estimates the amount of payment to be made in cash during a particular period.
Requirement 2
Schedule of cash payments for the month of July and August.
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Chapter 8 Solutions
MANAGERIAL ACCOUNTING W/CONNECT
- BTB (Pty) Limited is a distributor of PPE to rural health clinics in KZN. Turnover has been good and running expenses are under control, however the owner of the business, Mr Sam Jonas, is concerned that upcoming legal expenses and necessary vehicle repairs may negatively affect the business’ cash flow. He has hired you to prepare a cash budget for the next four months, from July to October 2022. All sales are made on credit and collected as follows: • 40% in the month of the sale; • 35% in the month after the sale; • 15% in the second month after the sale; • 10% will be written off as bad debts. All purchases are made on credit and paid for as follows: • 60% in the month of the purchase and • 40% in the month after the purchase. Total administration expenses (rent, rates stationary etc) will be R14 000 per month. The legal costs will be R34 000 in each of July and August 2022. Major repairs and maintenance to vehicles will cost R45 000 and this amount will be paid in three equal…arrow_forwardAssume RajanManufacturing Ltd makes sports vest for local soccer, baseball, basketball, and other sports teams. Rajan, the owner, purchases the vests and prints graphics on the vests for each team. The graphics were designed several years ago, so design costs are no longer incurred. On average, Rajan sells 1,000 vests each month. Typical monthly financial data is shown below: Per Unit Total Monthly Data at 1,000 Vests Sales revenue $20 $20 000 Variable costs: Direct materials $8 $8 000 Direct labour 2 2 000 Manufacturing overhead 3 13 3 000 13 000 Contribution margin $ 7 $ 7 000 Fixed costs (rent, salaries, etc.) 4 000 Profit $ 3 000 The monthly information provided relates to the company’s routine monthly operations. A representative of the local university recently approached Rajan to ask about a one-time special order.…arrow_forwardBTB (Pty) Limited is a distributor of PPE to rural health clinics in KZN. Turnover has been good and running expenses are under control, however the owner of the business, Mr Sam Jonas, is concerned that upcoming legal expenses and necessary vehicle repairs may negatively affect the business’ cash flow. He has hired you to prepare a cash budget for the next four months, from July to October 2022. All sales are made on credit and collected as follows: • 40% in the month of the sale; • 35% in the month after the sale; • 15% in the second month after the sale; • 10% will be written off as bad debts. All purchases are made on credit and paid for as follows: • 60% in the month of the purchase and • 40% in the month after the purchase. Total administration expenses (rent, rates stationary etc) will be R14 000 per month. The legal costs will be R34 000 in each of July and August 2022. Major repairs and maintenance to vehicles will cost R45 000 and this amount will be paid in three equal…arrow_forward
- BTB (Pty) Limited is a distributor of PPE to rural health clinics in KZN. Turnover has been good and running expenses are under control, however the owner of the business, Mr Sam Jonas, is concerned that upcoming legal expenses and necessary vehicle repairs may negatively affect the business’ cash flow. He has hired you to prepare a cash budget for the next four months, from July to October 2022. All sales are made on credit and collected as follows: • 40% in the month of the sale; • 35% in the month after the sale; • 15% in the second month after the sale; • 10% will be written off as bad debts. All purchases are made on credit and paid for as follows: • 60% in the month of the purchase and • 40% in the month after the purchase. Total administration expenses (rent, rates stationary etc) will be R14 000 per month. The legal costs will be R34 000 in each of July and August 2022. Major repairs and maintenance to vehicles will cost R45 000 and this amount will be paid in three equal…arrow_forwardBTB (Pty) Limited is a distributor of PPE to rural health clinics in KZN. Turnover has been good and running expenses are under control, however the owner of the business, Mr Sam Jonas, is concerned that upcoming legal expenses and necessary vehicle repairs may negatively affect the business’ cash flow. He has hired you to prepare a cash budget for the next four months, from July to October 2022. All sales are made on credit and collected as follows: • 40% in the month of the sale; • 35% in the month after the sale; • 15% in the second month after the sale; • 10% will be written off as bad debts. All purchases are made on credit and paid for as follows: • 60% in the month of the purchase and • 40% in the month after the purchase. Total administration expenses (rent, rates stationary etc) will be R14 000 per month. The legal costs will be R34 000 in each of July and August 2022. Major repairs and maintenance to vehicles will cost R45 000 and this amount will be paid in three equal…arrow_forwardBramble & Carla Vista Fabricators produces commemorative bricks that organizations use for fundraising projects. Joseph Bramble, the company's vice president of marketing, has prepared the following sales forecast for the first six months of the coming year. The company plans to sell the bricks for $24 each. January February March April May June 25,000 28,000 32,000 34,000 26,000 35,000 Bramble & Hill Fabricators' marketing department has identified the following monthly expenses that will be needed to support the company's sales and administrative functions. Depreciation $14,000 Sales staff salaries $26,000 Advertising $2,400 Executive salaries $35,000 Miscellaneous $1,900 In addition to these monthly expenses, the company will pay a commission to its salespeople equal to 8% of the sales revenue from each brick sold. The company expects bad debt expense to be 2% of sales…arrow_forward
- Bonita & Pharoah Fabricators produces commemorative bricks that organizations use for fundraising projects. David Bonita, the company's vice president of marketing, has prepared the following sales forecast for the first six months of the coming year. The company plans to sell the bricks for $24 each. January February March April May June 25,000 28,000 32,000 34,000 26,000 35,000 Bonita & Hill Fabricators' marketing department has identified the following monthly expenses that will be needed to support the company's sales and administrative functions. Depreciation $12,000 Sales staff salaries $29,000 Advertising $2,200 Executive salaries $36,000 Miscellaneous $1,700 In addition to these monthly expenses, the company will pay a commission to its salespeople equal to 8% of the sales revenue from each brick sold. The company expects bad debt expense to be 2% of sales revenue.Prepare…arrow_forwardThe Cycle Shoppe has decided to offer credit to its customers during the spring selling season. Sales are expected to be 330 bicycles. The average cost to the shop of a bicycle is $300. The owner knows that only 93 percent of the customers will be able to make their payments. To identify the remaining 7 percent, she is considering subscribing to a credit agency. The initial charge for this service is $540, with an additional charge of $6 per individual report. What is the amount of the net savings from subscribing to the credit agency? A. $3,790 B. $3,920 C. $4,080 D. $4,410 E. $4,950arrow_forwardNot graded.... Purchases Budget Rest Inn provides four-star accommodations for the vacation traveler. It is located just off a major interstate freeway. There are three other competing motels at the same exit. Hotel management is preparing its budget for the busiest three-month period of the year, June through August. To differentiate themselves from the competition, Rest Inn provides a complimentary spa package for each guest stay that includes specialty shampoo, conditioner, soap, lotion, toothpaste, lavender essential oil, slippers, earplugs, and a sleep mask. Rest Inn purchases the spa package from a local vendor that puts the Rest Inn private label on the products. The hotel follows a policy of purchasing enough spa packages to ensure that 40% of next month’s bookings are in the current month’s ending inventory. Rest Inn’s sales budget for guest stays for the next quarter is as follows: June 2,100 guest stays July 2,300 guest stays August 1,900 guest stays How…arrow_forward
- Over the winter months, Oriole Co. pre-sells fertilizing and weed control lawn services to be performed from May through September, inclusive. If payment is made in full by April 1, a 5% discount is allowed. In March, 270 customers took advantage of the discount and purchased the summer lawn service package for $760 each. In June, 220 customers purchased the package for $800, and in July, 81 purchased it for the same price. For customers who pay after May 1, service starts in the month the customer makes the payment. How much revenue should be recognized by the Oriole Co. in each of the months of March, April, May, June, July, August, and September? (Round answers to 0 decimal places, e.g. 5,275. Do not leave any answer field blank. Enter O for amounts.) March April May June July August September $ ՄԴԴԴ $arrow_forwardAssume Rajan Manufacturing Ltd makes sports vest for local soccer, baseball, basketball, and other sports teams. Rajan, the owner, purchases the vests and prints graphics on the vests for each team. The graphics were designed several years ago, so design costs are no longer incurred. On average, Rajan sells 1,000 vests each month. Typical monthly financial data is shown below: Per Unit Total Monthly Data at 1,000 VestsSales revenue $20 $20 000Variable costs: Direct materials $8 $8 000 Direct labour 2 2 000 Manufacturing overhead 3 13 3 000 13 000Contribution margin $ 7 $ 7 000Fixed costs (rent, salaries, etc.) 4 000Profit $ 3 000 The monthly information provided relates to the company’s routine monthly operations. A representative of the local university recently approached Rajan to ask about a one-time special order. The university will be…arrow_forwardSanjana's Sweet Shoppe operates on the boardwalk of a New England coastal town. The store only opens for the summer seaso the business is heavily dependent on the weather and the economy in addition to new competition. Sanjana Sweet, the owner, prepares a budget each year after reading long-term weather forecasts and estimates of summer tourism. The budget is a first ste planning whether she will need any loans and whether she needs to consider adjustments to store staffing. Based on expertise ar experience, she develops the following. Scenario Good Fair Poor Gross Margin per Customer (Price Cost of Poor Fair Good Poor Fair Good Poor Fair Good Sanjana assumes, for simplicity, that the gross margin and the estimated number of customers are independent. Thus, she has nine possible scenarios. In addition to the cost of the products sold, Sanjana estimates staffing costs to be $31,000 plus $2 for every customer in excess of 26,000. The marketing and administrative costs are estimated to be…arrow_forward
- Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College