Introduction To Managerial Accounting
8th Edition
ISBN: 9781259917066
Author: BREWER, Peter C., Garrison, Ray H., Noreen, Eric W.
Publisher: Mcgraw-hill Education,
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Chapter IE, Problem 3IE
Millen Corporation is a merchandiser that is preparing a
Millen’s managers have made the following additional assumptions and estimates:
- Estimated sales for July and August are S310.000 and $330,000, respectively.
- Each month's sales are 20% cash sales and 80% credit sales. Each month's credit sales are collected 30% in the month of sale and 70% in the month following the sale. All of the
accounts receivable at June 30 will be collected in July. - Each month's ending inventory must equal 20% of the cost of next month's sales. The cost of goods sold is 60% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts payable at June 30 will be paid in July.
- Monthly selling and administrative expenses are always $70,000. Each month $10,000 of this total amount is
depreciation expense and the remaining $60,000 relates to expenses that are paid in the month they are incurred. - The company does not plan to buy or sell any plant and equipment during July. It will not borrow" any money, pay a dividend, issue any common stock, or repurchase any of its own common stock during July.
Required:
- Calculate the expected cash collections for July.
- Calculate the expected cash disbursements for merchandise purchases for July.
- Prepare a cash budget for July.
- Prepare a
budgeted income statement for the month ended July 31. Use an absorption format. - Prepare a budgeted balance sheet as of July 31.
- Calculate the estimated accounts receivable turnover and inventory turnover for the month of July.
- Calculate the estimated operating cycle for the month of July. (Hint: Use 30 days in the numerator to calculate the average collection period and the average sales period.)
- Using the indirect method, calculate the estimated net cash provided by operating activities for July.
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Chapter IE Solutions
Introduction To Managerial Accounting
Ch. IE - INTEGRATION EXERCISE I Different Costs for...Ch. IE - Absorption Costing, Variable Costing, Cost,...Ch. IE - Cash Budget, Income Statement, Balance Sheet,...Ch. IE - Prob. 4IECh. IE - Plantwide and Departmental Overhead Allocation;...Ch. IE - Normal Costing versus Actual Costing Darwin...Ch. IE - Prob. 7IECh. IE - Master Budgeting Endless Mountain Company...Ch. IE - Statement of Cash Flows Refer to the information...Ch. IE - Financial Statement Ratio Analysis Refer to the...
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