ACCTG322 Chapter Notes - Chapter 9: Net Income, Retained Earnings, Earnings Before Interest And Taxes

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violetchinchilla775

8 Apr 2014

School

University of Alberta

Department

Accounting

Course

ACCTG322

Professor

Trish Stringer

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Document Summary

Total cash collections : september cash sales , payments to suppliers: Excess (deficiency) of cash available over disbursements = 8,000 units + 75,000 (next months sales) x 20% Sales) x 20: during july and august the company is building inventories in anticipation of peak sales in. In september and oc- tober inventories are being reduced in anticipation of a decrease in sales during the last months of the year. Therefore, production is less than sales during these months to cut back on inventory levels. * 48,400 units (october production) 4 kgs. per unit = 193,600 kgs. As shown in part (1), production is greatest in september. However, as shown in the raw ma- terial purchases budget, the purchases of materials is greatest a month earlier because materi- als must be on hand to support the heavy production scheduled for september. Problem 9-24: schedule of expected cash collections: Cash sales (40% of this month"s sales)

Related Questions

[The following informationapplies to the questions displayed below.]

Beech Corporation is a merchandising company that is preparing amaster budget for the third quarter of the calendar year. Thecompanyâs balance sheet as of June 30th is shown below:

Beech Corporation
Balance Sheet
June 30

Assets

Plant and equipment,net of depreciation

214,000

Total assets

$ 483,250

Liabilities and Stockholdersâ Equity

Total liabilitiesand stockholdersâ equity

$ 483,250

alue:
10.00 points

Required information

Beechâs managers have made thefollowing additional assumptions and estimates:

1.	Estimated sales for July, August, September, and October will be$250,000, $270,000, $260,000, and $280,000, respectively.
2.	All sales are on credit and all credit sales are collected. Eachmonthâs credit sales are collected 45% in the month of sale and 55%in the month following the sale. All of the accounts receivable atJune 30 will be collected in July.
3.	Each monthâs ending inventory must equal 20% of the cost of nextmonthâs sales. The cost of goods sold is 75% of sales. The companypays for 30% of its merchandise purchases in the month of thepurchase and the remaining 70% in the month following the purchase.All of the accounts payable at June 30 will be paid in July.
4.	Monthly selling and administrative expenses are always $46,000.Each month $5,000 of this total amount is depreciation expense andthe remaining $41,000 relates to expenses that are paid in themonth they are incurred.
5.	The company does not plan to borrow money or pay or declaredividends during the quarter ended September 30. The company doesnot plan to issue any common stock or repurchase its own stockduring the quarter ended September 30.

Required:

1.	Prepare a schedule of expected cash collections for July,August, and September. Also compute total cash collections for thequarter ended September 30.

Schedule of Expected Cash Collections
	Month
	July	August	September	Quarter
From accounts receivable				$0
From July sales				0
From August sales				0
From September sales				0
Total cash collections	$0	$0	$0	$0

2-a.

Prepare a merchandise purchases budget for July, August, andSeptember. Also compute total merchandise purchases for the quarterended September 30.

Merchandise Purchases Budget
	July	August	September	Total
Budgeted cost of goodssold

Total needs

Required purchases

2-b.

Prepare a schedule of expected cash disbursements formerchandise purchases for July, August, and September. Also computetotal cash disbursements for merchandise purchases for the quarterended September 30.

Schedule of Cash Disbursements for Purchases
	July	August	September	Total
From accounts payable				$0
From July purchases				0
From August purchases				0
From September purchases				0
Total cash disbursements	$0	$0	$0	$0

4.Prepare a balance sheet as of September 30.

Beech Corporation
Balance Sheet
September 30
Assets
Cash
Accounts receivable
Inventory
Plant and equipment, net


Total assets	$0
Liabilities and Stockholders'Equity
Accounts payable
Common stock
Retained earnings


Total liabilities andstockholders' equity	$0

Prepare an income statement for the quarter ended September30.

Beech Corporation
Income Statement
For the Quarter Ended September 30
Sales
Cost of goods sold
Gross margin	0
Selling and administrative expenses
Net operating income	0
Interest expense
Net income	$0

olivekoala956

Calgon Products, a distributor of organic beverages, needs acash budget for September. The following information is available:a. The cash balance at the beginning of September is $11,200. b.Actual sales for July and August and expected sales for Septemberare as follows: July August September Cash sales $ 5,300 $ 4,700 $7,200 Sales on account 22,000 29,000 45,000 Total sales $ 27,300 $33,700 $ 52,200 Sales on account are collected over a three-monthperiod as follows: 5% collected in the month of sale, 65% collectedin the month following sale, and 28% collected in the second monthfollowing sale. The remaining 2% is uncollectible. c. Purchases ofinventory will total $30,000 for September. Thirty percent of amonth's inventory purchases are paid for during the month ofpurchase. The accounts payable remaining from August's inventorypurchases total $17,000, all of which will be paid in September. d.Selling and administrative expenses are budgeted at $15,000 forSeptember. Of this amount, $3,000 is for depreciation. e. Equipmentcosting $18,000 will be purchased for cash during September, anddividends totaling $3,000 will be paid during the month. f. Thecompany maintains a minimum cash balance of $7,200. An open line ofcredit is available from the company's bank to bolster the cashbalance as needed. Required: 1. Prepare a schedule of expected cashcollections for September. (Do not round intermediate calculations.Omit the "$" sign in your response.) Schedule of Expected CashCollections September cash sales $ September collections onaccount: July sales August sales September sales Total cashcollections $ 2. Prepare a schedule of expected cash disbursementsfor inventory purchases for September. (Do not round intermediatecalculations. Omit the "$" sign in your response.) Schedule ofExpected Cash Disbursements Payments to suppliers: August purchases$ September purchases Total cash payments $ 3. Prepare a cashbudget for September. Indicate in the financing section anyborrowing that will be needed during September. Assume that anyinterest will not be paid until the following month. (Input allamounts as positive values except cash deficiency, repayments andinterest which should be indicated by a minus sign. Do not roundintermediate calculations. Leave no cells blank - be certain toenter "0" wherever required. Omit the "$" sign in your response.)Calgon Products Cash Budget For the Month of September Cashbalance, beginning $ Add cash receipts: Collections from customersTotal cash available before current financing Less disbursements:Payments to suppliers for inventory $ Selling and administrativeexpenses Equipment purchases Dividends paid Total disbursementsExcess (deficiency) of cash available over disbursements Financing:Borrowings Repayments Interest Total financing Cash balance, ending$

bluewhale999

3) The following information pertains to Amigo Corporation:

Month Sales Purchases

July $30,000 $10,000

August 34,000 12,000

September 38,000 14,000

October 42,000 16,000

November 48,000 18,000

December 60,000 20,000

â¢ Cash is collected from customers in the following manner:

Month of sale 40%

Month following sale 40%

Two months following sale 10%

Uncollectible Accounts 10%

â¢ 60% of purchases are paid for in cash in the month of purchase, and the other 40% is paid the following month.

Required: Complete the cash budget (no discounts) for the 4th quarter.

October November December

Beginning Balance: $10,000

Cash Collections from:

August

September

October

November

December

--------------- --------------- -----------------

Total Cash Collections

Total Cash Available

Cash Payments from:

September

October

November

December

-------------- ---------------- -------------------

Total Cash Payments

Ending Cash Balance

Amigo has $50,000 principal loan balance and needs to pay it, but also needs to keep a $10,000 minimum balance. What month is the earliest that Amigo can pay off this loan while keeping the minimum cash balance? ___________________

amberbadger867

ACCTG322 Chapter Notes - Chapter 9: Net Income, Retained Earnings, Earnings Before Interest And Taxes

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