0 5 Documents - Word Search Jesse Bladecki JB sert Design Layout References Mailings Review View Help Budgets for Cash Collections from Sales and Cash Payments for Purchases. Specialty Products, Inc., produces fire retardant tarps. The dollar amount of the company's quarterly sales and direct materials purchases are projected to be as follows (this information is derived from the previous exercises): 1st 2nd 3rd 4th Sales $2,340,000 $3,900,000 $4,680,000 $3,120,000 Direct materials purchases $ 289,952 $ 433,056 $ 464,224 $ 362,272 Assume all sales are made on credit. The company expects to collect 80 percent of sales in the quarter of sale and 20 percent the quarter following the sale. Accounts receivable at the end of last year totaled $400,000, all of which will be collected in the first quarter of the coming year. Assume all direct materials purchases are on credit. The company expects to pay 90 percent of purchases in the quarter of purchase and 10 percent the following quarter. Accounts payable at the end of last year totaled $30,000, all of which will be paid in the first quarter of this coming year. Required: a. Prepare a budget for cash collections from sales for Specialty Products, Inc. Use a format similar to the top section ofFigure 9.11. b. Prepare a budget for cash payments for purchases of materials for Specialty Products, Inc. Use a format similar to the middle section ofFigure 9.11. Round to the nearest dollar. Sales Budget for Service Organization, Ethical issues. Alenka and Associates is an accounting firm that estimates revenues based on billable hours. The company expects to charge 8,000 hours to clients in the first quarter, 9,000 hours in the second quarter, 7,000 hours in the third quarter and 8,500 hours in the fourth quarter. The average hourly billing rate is expected to be $100. Required: a. Prepare a services revenue budget for each quarter and include a column for the year ending December 31. (Hint: this is similar to a sales budget except sales are measured in labor hours rather than in units, and revenue is measured as an average hourly billing rate rather than a sales price per unit.) b. Since the manager of the company is given a bonus if actual billable hours exceed budgeted billable hours, the manager intentionally underestimated the number of expected billable hours for each quarter. How might this underestimate affect the company? nager of Focus T -- ter 9 Text (2).pdf x + V s148956/AppData/Local/Microsoft/Windows/INetCache/IE/6YQYX2LY/Chapter%209%20Text%20(2).pdf FIGURE 9.11 Cash Budget for Jerry's Ice Cream Jerry's Ice Cream Cash Budget Year Ending December 31 Quarter $ 180,000 144,000 $ Cash collections from sales Fourth quarter prior year (assumed) First quarter ($240,000 sales) Second quarter ($288,000 sales) Third quarter ($360,000 sales) Fourth quarter ($312,000 sales) Total cash collections 96,000 172,800 $ 115,200 216,000 $ 144,000 187,200 $ 331,200 $ 180,000 240,000 288,000 360,000 187,200 $1,255,200 $ 324,000 $ 268,800 $ 331,200 (30,000) (59,472) Cash payments for purchases of materials Fourth quarter prior year (assumed) First quarter (584,960 purchases) Second quarter ($102,400 purchases) Third quarter ($115,200 purchases) Fourth quarter ($101.920 purchases) Total cash payments for purchases (25,488) (71.680) (30,720) (80,640) (34,560) (71,344) $(105,904) (30,000) (84,960) (102,400) (115,200) (71,344) $ (403,904) $ (89,472) $ 97,168) $(111,360) Other cash payments*** Direct labor Manufacturing overhead Selling and adminstrative Capital expenditures Total other cash payments (53,040) (45.400) (55,000) (63,960) (49,600) (55,000) (76,960) (54,600) (55,000) (66,560) (50,600) (55,000) (25,000) S(197,160) (260,520) (200,200) (220,000) (25,000) ${705,720 $(153,440) $(168,560) $(186,560) 145,576 Excess of collections over payments Beginning cash balance Ending cash balance 81,088 - 10,000 $ 91,088 3,072 91,088 $ 94,160 33,280 94,160 $ 127,440 28,136 127,440 $ 155,576 10.000- $ 155576 *Based on sales budget shown in Figure 9.3. All sales are on credit: 60 percent collected in the quarter of sale and 40 percent collected the following quarter. **Based on purchases budget shown in Figure 9.5. All purchases are on credit: 70 percent paid in the quarter of 12/11/ 17 AMAA Snog Posturad Pode Cheesec EXERCISES: Set A continued) 31. Payback Period Cakeslation The pushack period is_ years and Tevestment Cash Outem aths C Ines Inflew Urecovered Investment Balance Year3