Simmonds International Ltd utilizes cash budgeting to show the financial implications of the use of the...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Simmonds International Ltd utilizes cash budgeting to show the financial implications of the use of the company's financial resources. At the beginning of October 2016, the company had a credit balance at the bank amounting to $3,740,000. The following information was extracted from the company's records: (1) The table below provides information on budgeted purchases for the periods indicated: Budgeted Purchases 2016 $ July 3,000,000 August 2,500,000 September 2,800,000 October 1,900,000 November 2,400,000 December 2,700,000 The company's records indicated that 80% of the company's purchases were for cash; and 20% was paid for two months after purchase. (2) Taxation for the third quarter of 2016 amounting to $800,000 was due in the first month of the last quarter in 2016. (3) In September 2016, the company bought a machine for $5,500,000. The agreement with the supplier was that a down payment of $1,000,000 would be made in September 2016 and the balance paid off in equal amounts over the next three months. (4) Insurance claim of $5,100,000 for a vehicle written off in an accident was to be received equally over the three months of the last quarter in 2016. (5) Due to cash limitations, the company planned to liquidate investments worth $4,000,000 in November 2016 and $2,000,000 in December 2016. Dividends of $3,000,000 will be distributed to shareholders in November 2016. (6) As a result of planned expansion, the company will pay $2,500,000 in October 2016 for a plot of land next door. (7) In October 2016, the company sold a motor vehicle for $600,000 to one of its staff members while $480,000 written off as bad debt in January 2016, was recovered in the first month of the last quarter in 2016. Rental income amounting to $3,000,000 was budgeted for financial year 2016. (8) Operating expenses amounted to $8,400,000 was budgeted for financial year 2016. Included in this figure was annual depreciation of $1,200,000. (9) Salesmen are paid 5% of sales collection each month. Miscellaneous expenses amounting to $1,500,000 annually was not included in the operating expenses budget. (10) Records from the company's books revealed that 50% of sales are for cash; 30% is received one month later; and the balance one month later. The following table provides information on budgeted sales for the periods indicated: Budgeted Sales 2016 July August September October November December $ 4,000,000 2,800,000 3,500,000 2,600,000 2,900,000 3,900,000 Required: (a) A cash collection summary from sales showing cash and credit collections separately for the last quarter of 2016. (5 marks) (b) A payment summary for purchases showing cash purchases and credit purchases separately for the last quarter of 2016. (5 marks) (c) A cash budget for the final quarter of 2016. Clearly show amounts for cash sales, credit sales, cash purchases, credit purchases and totals. (30 marks) Simmonds International Ltd utilizes cash budgeting to show the financial implications of the use of the company's financial resources. At the beginning of October 2016, the company had a credit balance at the bank amounting to $3,740,000. The following information was extracted from the company's records: (1) The table below provides information on budgeted purchases for the periods indicated: Budgeted Purchases 2016 $ July 3,000,000 August 2,500,000 September 2,800,000 October 1,900,000 November 2,400,000 December 2,700,000 The company's records indicated that 80% of the company's purchases were for cash; and 20% was paid for two months after purchase. (2) Taxation for the third quarter of 2016 amounting to $800,000 was due in the first month of the last quarter in 2016. (3) In September 2016, the company bought a machine for $5,500,000. The agreement with the supplier was that a down payment of $1,000,000 would be made in September 2016 and the balance paid off in equal amounts over the next three months. (4) Insurance claim of $5,100,000 for a vehicle written off in an accident was to be received equally over the three months of the last quarter in 2016. (5) Due to cash limitations, the company planned to liquidate investments worth $4,000,000 in November 2016 and $2,000,000 in December 2016. Dividends of $3,000,000 will be distributed to shareholders in November 2016. (6) As a result of planned expansion, the company will pay $2,500,000 in October 2016 for a plot of land next door. (7) In October 2016, the company sold a motor vehicle for $600,000 to one of its staff members while $480,000 written off as bad debt in January 2016, was recovered in the first month of the last quarter in 2016. Rental income amounting to $3,000,000 was budgeted for financial year 2016. (8) Operating expenses amounted to $8,400,000 was budgeted for financial year 2016. Included in this figure was annual depreciation of $1,200,000. (9) Salesmen are paid 5% of sales collection each month. Miscellaneous expenses amounting to $1,500,000 annually was not included in the operating expenses budget. (10) Records from the company's books revealed that 50% of sales are for cash; 30% is received one month later; and the balance one month later. The following table provides information on budgeted sales for the periods indicated: Budgeted Sales 2016 July August September October November December $ 4,000,000 2,800,000 3,500,000 2,600,000 2,900,000 3,900,000 Required: (a) A cash collection summary from sales showing cash and credit collections separately for the last quarter of 2016. (5 marks) (b) A payment summary for purchases showing cash purchases and credit purchases separately for the last quarter of 2016. (5 marks) (c) A cash budget for the final quarter of 2016. Clearly show amounts for cash sales, credit sales, cash purchases, credit purchases and totals. (30 marks)
Expert Answer:
Answer rating: 100% (QA)
Lets start with part a a Cash Collection Summary from Sales for the Last Quarter of 2016 To prepare the cash collection summary we need to calculate the cash collected for each months sales for the la... View the full answer
Related Book For
Financial Reporting Financial Statement Analysis and Valuation a strategic perspective
ISBN: 978-1337614689
9th edition
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Posted Date:
Students also viewed these accounting questions
-
Question 2 (Approximate completion time: 50 mins) CLO 4 (Total 35 Marks) At the beginning of April 2020, Broderick & Co. Ltd had a closing cash balance of $500,000 at the bank. The companys...
-
1.2.1 The format recommended by the International Financial Reporting Standards for the preparation of a statement of profit or loss and other comprehensive income calculates and shows the gross...
-
Bytes (Pty) Ltd (Bytes or the company is a manufacturer of laptops. Bytes is a resident of the Republic and is not considered to be a small business corporation. The company has a February financial...
-
On April 1, 2014, Briggs Corp. purchases a 24-month property insurance policy for $72,000. The policy is effective immediately. Assume that Briggs prepares adjusting entries only once a year, on...
-
The bookkeeper of Triad Co. gathered the following data from individual employee earnings records and daily time cards. Your task is to complete a payroll register on October 13. Assume the...
-
Should franchise information provided by a franchisor be discounted? Why or why not?
-
Antwone Equipment Corporation sold a precision tool machine with computer controls to Trudeau Corporation for $400,000 on January 2 and agreed to take payment nine months later on October 2. Assuming...
-
On October 1, 2014, Caldonia Company paid East Alabama Rentals $4,800 for a 12-month lease on warehouse space. Required a. Record the deferral and the related December 31, 2014, adjustment for...
-
Sparky Corporation uses the weighted - average method of process costing. The following information is available for February in its Molding department: \ table [ [ , Units, \ table [ [ Direct...
-
At which point in the diagram is the magnetic field strength (a) The smallest and (b) The largest? Explain. D E. B. F.
-
Arthur crafts miniature chocolate dollhouses which he sells for $23 each. Arthur has calculated the breakeven level of revenues for his business at $1,260 of sales. The dollhouses have a variable cost
-
Someone is speaking about the gun reform issue, but in each case, there is an unstated assumption. An assumption is a statement that is taken for granted. From the choices that follow each item,...
-
7. For function f(x) = x + 1, use compositions, fof-1 and f-1 of, not to solve for it again, to show that 3x-3 f-(x)= 2 Note: Solving for the inverse will not be credited.
-
Over the course of the term we've been dealing with the sense that the International system is at an inflection point. It seems clear that if the balance of power is not shifting markedly, it is at...
-
On January 1, 2024, the Excel Delivery Company purchased a delivery van for $33,300. At the end of its five-year service life, it is estimated that the van will be worth $3,000. During the five-year...
-
What is the best org structure for ICFR Internal Controls Unit? how many units it should contain and what are they? if you can link it to the best practice it will be good
-
Fiven the polynomial, identify the coefficients and degree of each term: 3x+2-7x2+3x-4x First term: degree= coefficient = 3 Second term: degree= coefficient = 2 Third term: degree= 2 coefficient =-7...
-
Give the structural formulas of the alkenes that, on ozonolysis, give: a. (CH3)2C=O and CH2=O b. Only (CH3CH2)2C=O c. CH3CH=O and CH3CH2CH=O d. O=CHCH2CH2CH2CH=O
-
DataTech (DT) is a software manufacturer. It develops, markets, and supports software that helps manufacturers improve the competitiveness of their products. DT provides a detailed description of its...
-
In this chapter, we evaluated shares of common equity in Starbucks using the value-to-book approach, market multiples, and reverse engineering. The Coca-Cola Company competes directly with Starbucks....
-
VF Corporation is an apparel company that owns recognizable brands like Timberland, Vans, Reef, and 7 For All Mankind. Exhibit 5.18 and 5.19 present balance sheets and income statements,...
-
Three spanning trees of Graph \(K\), which include edges \(m n\) and \(o q\), but do not include no. Use the figure shown to draw three possible spanning trees that fit the given description. b C d e...
-
Graph 18 Use Kruskal's Algorithm to find a minimum spanning tree of the given graph. Graph it and calculate its weight. 9.3 a 1.5 13.3 5.2 8.7 Graph 17 2.0 50' 100 110 250 300 90 75 225 210 425 Graph...
-
The Prepaid Insurance account began the year with a balance of $460. During the year, insurance in the amount of $1,040 was purchased. At the end of the year (December 31), the amount of insurance...
Study smarter with the SolutionInn App