sch07.xls

Student Name: InstructorClass: McGraw-Hill/Irwin

Problem 07-20A

1.PHOTOTEC, INC.

Schedule of cash receipts:Cash sales-June $ 60,000 Collections on accounts receivable: May 31 balance 72,000 June 95,000 Total cash receipts $ 227,000

Correct! Schedule of cash payments for purchases:May 31 accounts payable balance $ 90,000 June purchases 80,000 Total cash payments $ 170,000

Correct!

PHOTOTEC, INC.Cash Budget

For the Month of June

Cash balance, beginning $ 8,000 Add receipts from customers 227,000 Total cash available 235,000 Less disbursements: Purchase of inventory 170,000 Selling and administrative expenses 51,000 Purchases of equipment 9,000 Total cash disbursements 230,000 Excess of receipts over disbursements 5,000 Financing: Borrowings-note 18,000 Repayments-note (15,000) Interest (500)Total financing 2,500 Cash balance, ending $ 7,500

Correct!

E9

Enter the appropriate data in the yellow cells. Your answers for "Total cash receipts" and Total cash payments" will be verified.

E25

Enter the appropriate data in the yellow cells. Your answer for "Cash balance, ending" will be verified.


Problem 07-20A

2.PHOTOTEC, INC.

Budgeted Income StatementFor the Month of June

Sales $ 250,000 Cost of goods sold: Beginning inventory $ 30,000 Purchases 200,000 Goods available for sale 230,000 Ending inventory 40,000 Cost of goods sold 190,000 Gross margin 60,000 Selling and administrative expenses 53,000 Net operating income 7,000 Interest expense 500 Net income $ 6,500

Correct!

3.PHOTOTEC, INC.

Budgeted Balance SheetJune 30

AssetsCash $ 7,500 Accounts receivable 95,000 Inventory 40,000 Buildings and equipment, net of depreciation 507,000 Total assets $ 649,500

Liabilities and EquityAccounts payable $ 120,000 Note payable 18,000 Capital stock 420,000 Retained earnings 91,500 Total liabilities and equity $ 649,500

Correct!

F47

Enter the appropriate data in the yellow cells. Your answer for "Net income" will be verified.

E67

Enter the appropriate data in the yellow cells. Your answer for "Total liabilities and equity" will be verified.

Given Data P07-20A:

PHOTOTEC, INC.Balance Sheet

May 31

AssetsCash $ 8,000 Accounts receivable 72,000 Inventory 30,000 Buildings and equipment, net of depreciation 500,000 Total assets $ 610,000

Liabilities and Stockholders' EquityAccounts payable $ 90,000 Note payable 15,000 Capital stock 420,000 Retained earnings 85,000 Total liabilities and stockholders' equity $ 610,000

Budgeted Data relating to June:Budgeted sales $ 250,000 Budgeted sales in cash (remainder credit) $ 60,000 Percent of credit sales collected in same month 50%May accounts receivable collected 100%Expected inventory purchases $ 200,000 Purchases paid for in cash in month purchased 40%May accounts payable paid 100%Budgeted inventory balance, June 30 $ 40,000 Budgeted selling and administrative expenses $ 51,000 Budgeted depreciation $ 2,000 Existing note payable paid 100%Interest expense $ 500 Equipment purchases $ 9,000 New note $ 18,000


Problem 07-23A

UNIVAX, INC.

1a. Schedule of expected cash collections:

Year 2 QuarterFirst Second Third Fourth Total

Year 1 - Fourth quarter sales: $ 195,000 $ 195,000 Year 2 - First quarter sales: 132,000 $ 260,000 392,000 Year 2 - Second quarter sales: 165,000 $ 325,000 490,000 Year 2 - Third quarter sales: 198,000 $ 390,000 588,000 Year 2 - Fourth quarter sales: 158,400 158,400 Total cash collections $ 327,000 $ 425,000 $ 523,000 $ 548,400 $ 1,823,400

Correct! Correct! Correct! Correct! Correct!

1b. Schedule of budgeted cash disbursements for merchandise purchases:

Year 2 QuarterFirst Second Third Fourth Total

Year 1 - Fourth quarter purchases: $ 144,000 $ 144,000 Year 2 - First quarter purchases: 52,000 $ 208,000 260,000 Year 2 - Second quarter purchases: 62,000 $ 248,000 310,000 Year 2 - Third quarter purchases: 74,000 $ 296,000 370,000 Year 2 - Fourth quarter purchases: 48,000 48,000 Total cash disbursements $ 196,000 $ 270,000 $ 322,000 $ 344,000 $ 1,132,000


2. Budgeted selling and administrative expenses:

Year 2 QuarterFirst Second Third Fourth Year

Budgeted sales $ 400,000 $ 500,000 $ 600,000 $ 480,000 $ 1,980,000 Variable expense rate 12% 12% 12% 12% 12%Variable expenses $ 48,000 $ 60,000 $ 72,000 $ 57,600 $ 237,600 Fixed expenses 90,000 90,000 90,000 90,000 360,000 Total expenses 138,000 150,000 162,000 147,600 597,600 Less depreciation 20,000 20,000 20,000 20,000 80,000 Cash disbursements $ 118,000 $ 130,000 $ 142,000 $ 127,600 $ 517,600

3. Cash budget for Year 2:

Year 2 QuarterFirst Second Third Fourth Year

Cash balance, beginning $ 20,000 $ 23,000 $ 18,000 $ 18,500 $ 20,000 Add collections from sales 327,000 425,000 523,000 548,400 1,823,400 Total cash available 347,000 448,000 541,000 566,900 1,843,400 Less disbursements: Merchandise purchases 196,000 270,000 322,000 344,000 1,132,000 Operating expenses 118,000 130,000 142,000 127,600 517,600 Dividends 10,000 10,000 10,000 10,000 40,000 Land - 80,000 48,500 - 128,500 Total disbursements 324,000 490,000 522,500 481,600 1,818,100 Excess (deficiency) of receipts over disbursements 23,000 (42,000) 18,500 85,300 25,300 Financing: Borrowings - 60,000 - 60,000 Repayments - - (60,000) (60,000) Interest - - (5,400) (5,400)Total financing - 60,000 - (65,400) (5,400)Cash balance, ending $ 23,000 $ 18,000 $ 18,500 $ 19,900 $ 19,900


Given Data P07-23A:

UNIVAX, INC.

Budgeted Sales and Merchandise Purchases:

MerchandiseSales Purchases

Year 1: Fourth quarter actual $ 300,000 $ 180,000 Year 2: First quarter estimated $ 400,000 $ 260,000 Second quarter estimated $ 500,000 $ 310,000 Third quarter estimated $ 600,000 $ 370,000 Fourth quarter estimated $ 480,000 $ 240,000

Additional information:Percentage of sales collected in same quarter 33%Percentage of sales collected in quarter following sales 65%Percentage of sales deemed uncollectible 2%Percentage of merchandise purchases paid in same quarter 20%Percentage of merchandise purchases pain in following quarter 80%Budgeted quarterly operating expenses for Year 2 $ 90,000 plus percentage of sales 12%Amount of depreciation budgeted each quarter $ 20,000 Dividends to be paid each quarter $ 10,000 Cash purchase of land in second quarter $ 80,000 Cash purchase of land in third quarter $ 48,500 Cash account balance at end of Year 1 $ 20,000 Minimum cash balance required $ 18,000 Bank loan borrowing increments $ 10,000 Maximum loan balance allowed $ 100,000 Interest rate per month on bank loans 1.0%Current outstanding loan balance $ -


07-Case

CRAVAT SALES COMPANYBudgets

April May June Quarter1a. Sales budget:Budgeted sales in units 35,000 45,000 60,000 140,000 Selling price per unit $ 8 $ 8 $ 8 $ 8 Total sales $ 280,000 $ 360,000 $ 480,000 $ 1,120,000

Correct! Correct! Correct! Correct!1b. Schedule of expected cash collections:February sales $ 48,000 $ 48,000 March sales 112,000 56,000 168,000 April sales 70,000 140,000 $ 70,000 280,000 May sales 90,000 180,000 270,000 June sales 120,000 120,000 Total cash collections $ 230,000 $ 286,000 $ 370,000 $ 886,000

Correct! Correct! Correct! Correct!1c. Merchandise purchases budget:Budgeted sales in units 35,000 45,000 60,000 140,000 Add budgeted ending inventory 40,500 54,000 36,000 36,000 Total needs 75,500 99,000 96,000 176,000 Less beginning inventory 31,500 40,500 54,000 31,500 Required unit purchases 44,000 58,500 42,000 144,500 Unit cost $ 5 $ 5 $ 5 $ 5 Required dollar purchases $ 220,000 $ 292,500 $ 210,000 $ 722,500

Correct! Correct! Correct! Correct!1d. Budgeted cash disbursements for merchandise purchases:March purchases $ 85,750 $ 85,750 April purchases 110,000 $ 110,000 220,000 May purchases 146,250 $ 146,250 292,500 June purchases 105,000 105,000 Total cash payments $ 195,750 $ 256,250 $ 251,250 $ 703,250

Correct! Correct! Correct! Correct!

2.CRAVAT SALES COMPANY

Cash BudgetFor the Three Months Ending June 30

April May June QuarterCash balance, beginning $ 14,000 $ 10,250 $ 10,000 $ 14,000 Add receipts from customers 230,000 286,000 370,000 886,000 Total cash available 244,000 296,250 380,000 900,000 Less disbursements: Purchase of inventory 195,750 256,250 251,250 703,250 Sales commissions 35,000 45,000 60,000 140,000 Salaries and wages 22,000 22,000 22,000 66,000 Utilities 14,000 14,000 14,000 42,000 Miscellaneous 3,000 3,000 3,000 9,000 Dividends paid 12,000 - - 12,000 Land purchases - 25,000 - 25,000 Total disbursements 281,750 365,250 350,250 997,250 Excess (deficiency) of receipts over disbursements (37,750) (69,000) 29,750 (97,250)Financing: Borrowings 48,000 79,000 127,000 Repayments (16,000) (16,000) Interest (3,020) (3,020)Total financing 48,000 79,000 (19,020) 107,980 Cash balance, ending $ 10,250 $ 10,000 $ 10,730 $ 10,730

F10

Enter the appropriate data in the yellow cells. Your final answers for each section will be verified.

F45

Enter the appropriate data in the yellow cells. Your answers for "Cash balance, ending" will be verified.


07-Case

Correct! Correct! Correct! Correct!


07-Case

3.CRAVAT SALES COMPANYBudgeted Income Statement

For the Three Months Ended June 30

Sales in units 140,000 Sales revenue $ 1,120,000 Variable expenses: Cost of goods sold $ 700,000 Commissions 140,000 840,000 Contribution margin 280,000 Fixed expenses: Wages and salaries 66,000 Utilities 42,000 Insurance expired 3,600 Depreciation 4,500 Miscellaneous 9,000 125,100 Net operating income 154,900 Less interest expense 3,020 Net income $ 151,880

Correct!

4.CRAVAT SALES COMPANY

Budgeted Balance SheetJune 30

AssetsCash $ 10,730 Accounts receivable 450,000 Inventory 180,000 Unexpired insurance 10,800 Fixed assets, net of depreciation 193,200 Total assets $ 844,730

Correct! Liabilities and Stockholders' Equity

Accounts payable, purchases $ 105,000 Dividends payable 12,000 Loans payable, bank 111,000 Capital stock, no par 300,000 Retained earnings 316,730 Total liabilities and equity $ 844,730

Correct! Accounts receivable at June 30: May sales $ 90,000 June sales 360,000 Total $ 450,000

Correct! Retained earnings at June 30: Balance, March 31 $ 176,850 Add net income 151,880 Total 328,730 Less dividends declared 12,000 Balance, June 30 $ 316,730

Correct!

G72

Enter the appropriate data in the yellow cells. Your answer for "Net income" will be verified.

F95

Enter the appropriate data in the yellow cells. Your answer for "Total assets" will be verified.

F96

HINT: Use calculation below.

F107

HINT: Use calculation below.

Given Data 07-Case:

CRAVAT SALES COMPANY

Minimum ending monthly cash balance $ 10,000 Selling price $ 8

Recent and forecast sales (in units):January (actual) 20,000 February (actual) 24,000 March (actual) 28,000 April 35,000 May 45,000 June 60,000 July 40,000 August 36,000 September 32,000

Desired ending inventories (percentage of next month's sales) 90%Cost of earrings $ 5

Purchases paid as follows: In month of purchase 50% In following month 50%

Collection on sales: Sales collected current month 25% Sales collected following month 50% Sales collected 2nd month following 25%

Monthly selling and administrative expenses:Variable: Sales commissions (per tie) $ 1.00

Fixed: Wages and salaries $ 22,000 Utilities $ 14,000 Insurance $ 1,200 Depreciation $ 1,500 Miscellaneous $ 3,000

Land purchased in May $ 25,000 Dividends declared each quarter $ 12,000

Given Data 07-Case:

Balance sheet at March 31:Assets

Cash $ 14,000 Accounts receivable February sales $ 48,000 March sales 168,000 216,000 Inventory (31,500 units) 157,500 Prepaid insurance 14,400 Fixed assets, net of depreciation 172,700 Total assets $ 574,600

Liabilities and Stockholders' EquityAccounts payable $ 85,750 Dividends payable 12,000 Common stock 300,000 Retained earnings 176,850 Total liabilities and stockholders' equity $ 574,600

Agreement with Bank:Borrowing increments $ 1,000 Maximum borrowing amount $ 140,000 Interest rate per month 1%Repayment increments $ 1,000 Total of interest paid each quarter 100%Required minimum cash balance $ 10,000

sch07.xls

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