1 8.3 The information given below is Bobcats Company's beginning balance sheet, estimates and policies, and the partially completed Master Budget for January and February. Use the information to answer the 22 Multiple Choice Questions, each asking for a missing number from the Master Budget. Round all your computations to the nearest dollar 1 Sales are expected to be $80,400 in January, 5100,400 in February, and $105,400 in March 2. All sales are on credit and it collects 20% of all sales in the month of the sale, the remaining Bo% in the month after the sale. 3. The cost of goods sold is equal to 40% of sales 4. The company likes to keep an ending inventory on hand equal to 15% of next month's cost of goods sold 5. All purchases of inventory are on account, and the company pays for 60% of all purchases in the month of the purchase. 40% In the month after the purchase 6. The company pays its sales force a commission equal to 3% of sales 7. The company also believes that its miscellaneous expense is equal to $500 plus 2% of sales. 8. Rent is $2,000 per month, Supplies are $600 per month and Depreciation is $1,800 per month 9. On January 1st, the company purchased an insurance policy covering 24 months for $28,800 10. All selling and administrative expenses are paid in the month they are incurred except for commissions that are paid in the month after they are earned and the insurance which is paid two year in advance. 11. The company purchased $4,000 of Land on February 18th. They paid cash for the land. 12. Interest on long term debt is equal to 1% of the beginning balance and is paid each month. The company must maintain a minimum balance in cash of $15,000 and will use any casli surplus to pay down long-term debt. The company borrows cash in $1,000 increments 13. The company is subject to a 30% income tax rate. The company pays Income taxes in the month after they are accrued 14. The company's Board of Directors declared a cash dividend of 950 on January 4th. The dividend will be pold on February 10th 15. The company had a beginning balance sheet (as of January 1) as follows: 1 Assets Current Assets Cash Accounts Receivable Prepaid Insurance Inventory Total Current Assets Liabilities & SE Current Liabilities $16,000 Accounts Payable 48,000 Commissions Payable OIncome Taxes Payable 9.600 Dividends Payable 73,600 Total Current Liabilities $23,500 3,400 9.275 00:28:17 36,175 Long-term Debt 80,000 Property, Plant & Equipment Equipment Land Accumulated Depreciation Net PPE 95,000 Stockholders Equity 8,800 Common Stock (25.000) Return Earnings 78,800 Total SE 26.225 10.000 36.225 Total Assets $152,400 Total Liabilities & SE $152,400 Babcats Company's partically completed master budget is as follows: Sales Budget January February Credit Sales $80,400 $100,400 March $105,400 Cash Receipts from Customers From Current Month Credit Sales From Prior Month Credit Sales Total Cash Receipts from Customers (1) Inventory Purchases Budget January February $40,160 March $42,160 COGS Desired Ending Inventory Total Inventory Needed Beginning Inventory Inventory Purchases (2) Cash Payments for Inventory Purchases For Current Month Purchases For Prior Month Purchases Total Cash Payments for Inventory Purchases $40,650 (3) Selling & Administrative Expenses Budget January February 1 (4) Variable Selling & Administrative Expenses Commissions Miscellaneous Total Variable S&A Expenses 4,020 5,020 8 00:37:46 2.000 2,000 Fixed Selling & Administrative Expenses Miscellaneous Rent Supplies Depreciation Insurance Total Fixed S&A Expenses 1,800 1,800 (5) $6,100 $6,100 Cash Payments for S&A Expenses Commissions Utilities Advertising Salaries Depreciation Insurance Total Cash Payments for S&A Expenses (6) (7) $36.908 $7,520 Cash Budget 1 January February Beginning Cash Balance Cash Receipts from Customers Total Cash Available 80,080 0:37:26 40,650 Cash Payments For Inventory Purchases For S&A Expenses For Interest For Income Taxes For Land Purchase For Dividends Total Cash Payments (8) 87,633 Surplus (Deficit) Borrowing (Repayment) Ending Cash Balance 39,441 (10) $ 15,000 MDL January 580,400 February $100.400 1 (11) Sales Less: Variable Expenses COGS Variable S&A Expenses Contribution Margin Less Fixed Expenses Fixed S&A Expenses Interest Expense Pre-tax Net Income Income Taxes Expense After-tax Net Income 1096 $26.124 1442 $33,663 (10) Balance Sheet Assets Current Assets Cash Accounts Receivable Prepaid insurance inventory Total Current Assets (13) Liabilities & SE Current Liabilities Accounts Payable Commissions Payabio Income Taxes Payable Dividends Payable Total Current Liabilmes (19) (14) (15) (20) Long-term Debt (21) 95.000 26.226 Property. Plant & Equipment Equipment Land Accumulated Depreciation Net PPE Total Assets 95.000 Stockholders Equity (16) Common Stock Return Earnings Total SE $207,244 Total Liabilities & SE 26,225 (22) $190,391 $190,391 $207,244 (1) What are Total Cash Receipts from customers for January? 1 $48,000 $84,400 $64,080 $16,080 8 00:3645 (2) What are Total Purchases of Inventory for January? $40,460 $47,784 O $37,620 $28,584 (3) What are Total Cash Payments for Purchases of Inventory for February? $24,276 $40,460 $35,710 $40,650 (4) What is Total Commission Expense for January? $4,020 $2,412 $3,012 $5,424 1 1 (5) What is Total Insurance Expense for January? $0 $28,800 O $2,400 $1.200 OD 36 25 (6) What is the Total Cash Payment for Depreciation Expense for January? $25,000 $3,600 $0 $1,800 (7) What is Total Cash Payment for Insurance Expense for February? $0 $28,800 $1.200 $2,400 (8) What is Total Interest Expense for January? $800 $1,030 $1,830 (9) What is Total Cash Surplus (Deficit) for January? 1 $39,441 O $-11,553 $7,553 $-7,553 8 00.36.00 (10) What is Total Net Borrowing (Repayment) for February? $-39,441 O $-24,441 O $24,441 $23,000 (11) What is the Contribution Margin for February? $44,220 $55,220 O $100,400 O $33,663 (12) What is the balance of Cash on February 28? $15,447 $0 $16,000 O $15,000 1 (13) What is the balance of Accounts Receivable on February 28? O $80,320 $84,320 O $64,320 $48,000 0035.50 (14) What is the balance of Prepaid Insurance on January 31? $0 $26,400 O $27,600 $28,800 (15) What is the balance of Inventory on February 287 O $40,460 e $9,600 $6,324 $6,024 (16) What is the balance of Land on February 28? $8,800 $4,000 $0 $12.800 1 (17) What is the balance of Accumulated Depreciation, as reflected on the Balance Sheet, on January 31? O $ 1,800 $-28,600 O$ 26,800 $-23,200 00:35.35 (18) What is the balance of Accounts Payable on February 28? $ 11,434 $16,864 $16,184 $24,276 (19) What is the balance of Commissions Payable on January 31? O $2,412 $3,400 $3,012 $5,812 (20) What is the balance of Dividends Payable on January 317 $950 $0 $800 O $1.900 (20) What is the balance of Dividends Payable on January 31? 00:35:25 $950 $0 O $800 $1,900 (21) What is the balance of Long-Term Debt on January 31? $78,559 $80,000 $102,000 $103,000 (22) What is the balance of Retained Earnings on February 28? $58,837 $35,174 $68,837 $69,787 1 8.3 The information given below is Bobcats Company's beginning balance sheet, estimates and policies, and the partially completed Master Budget for January and February. Use the information to answer the 22 Multiple Choice Questions, each asking for a missing number from the Master Budget. Round all your computations to the nearest dollar 1 Sales are expected to be $80,400 in January, 5100,400 in February, and $105,400 in March 2. All sales are on credit and it collects 20% of all sales in the month of the sale, the remaining Bo% in the month after the sale. 3. The cost of goods sold is equal to 40% of sales 4. The company likes to keep an ending inventory on hand equal to 15% of next month's cost of goods sold 5. All purchases of inventory are on account, and the company pays for 60% of all purchases in the month of the purchase. 40% In the month after the purchase 6. The company pays its sales force a commission equal to 3% of sales 7. The company also believes that its miscellaneous expense is equal to $500 plus 2% of sales. 8. Rent is $2,000 per month, Supplies are $600 per month and Depreciation is $1,800 per month 9. On January 1st, the company purchased an insurance policy covering 24 months for $28,800 10. All selling and administrative expenses are paid in the month they are incurred except for commissions that are paid in the month after they are earned and the insurance which is paid two year in advance. 11. The company purchased $4,000 of Land on February 18th. They paid cash for the land. 12. Interest on long term debt is equal to 1% of the beginning balance and is paid each month. The company must maintain a minimum balance in cash of $15,000 and will use any casli surplus to pay down long-term debt. The company borrows cash in $1,000 increments 13. The company is subject to a 30% income tax rate. The company pays Income taxes in the month after they are accrued 14. The company's Board of Directors declared a cash dividend of 950 on January 4th. The dividend will be pold on February 10th 15. The company had a beginning balance sheet (as of January 1) as follows: 1 Assets Current Assets Cash Accounts Receivable Prepaid Insurance Inventory Total Current Assets Liabilities & SE Current Liabilities $16,000 Accounts Payable 48,000 Commissions Payable OIncome Taxes Payable 9.600 Dividends Payable 73,600 Total Current Liabilities $23,500 3,400 9.275 00:28:17 36,175 Long-term Debt 80,000 Property, Plant & Equipment Equipment Land Accumulated Depreciation Net PPE 95,000 Stockholders Equity 8,800 Common Stock (25.000) Return Earnings 78,800 Total SE 26.225 10.000 36.225 Total Assets $152,400 Total Liabilities & SE $152,400 Babcats Company's partically completed master budget is as follows: Sales Budget January February Credit Sales $80,400 $100,400 March $105,400 Cash Receipts from Customers From Current Month Credit Sales From Prior Month Credit Sales Total Cash Receipts from Customers (1) Inventory Purchases Budget January February $40,160 March $42,160 COGS Desired Ending Inventory Total Inventory Needed Beginning Inventory Inventory Purchases (2) Cash Payments for Inventory Purchases For Current Month Purchases For Prior Month Purchases Total Cash Payments for Inventory Purchases $40,650 (3) Selling & Administrative Expenses Budget January February 1 (4) Variable Selling & Administrative Expenses Commissions Miscellaneous Total Variable S&A Expenses 4,020 5,020 8 00:37:46 2.000 2,000 Fixed Selling & Administrative Expenses Miscellaneous Rent Supplies Depreciation Insurance Total Fixed S&A Expenses 1,800 1,800 (5) $6,100 $6,100 Cash Payments for S&A Expenses Commissions Utilities Advertising Salaries Depreciation Insurance Total Cash Payments for S&A Expenses (6) (7) $36.908 $7,520 Cash Budget 1 January February Beginning Cash Balance Cash Receipts from Customers Total Cash Available 80,080 0:37:26 40,650 Cash Payments For Inventory Purchases For S&A Expenses For Interest For Income Taxes For Land Purchase For Dividends Total Cash Payments (8) 87,633 Surplus (Deficit) Borrowing (Repayment) Ending Cash Balance 39,441 (10) $ 15,000 MDL January 580,400 February $100.400 1 (11) Sales Less: Variable Expenses COGS Variable S&A Expenses Contribution Margin Less Fixed Expenses Fixed S&A Expenses Interest Expense Pre-tax Net Income Income Taxes Expense After-tax Net Income 1096 $26.124 1442 $33,663 (10) Balance Sheet Assets Current Assets Cash Accounts Receivable Prepaid insurance inventory Total Current Assets (13) Liabilities & SE Current Liabilities Accounts Payable Commissions Payabio Income Taxes Payable Dividends Payable Total Current Liabilmes (19) (14) (15) (20) Long-term Debt (21) 95.000 26.226 Property. Plant & Equipment Equipment Land Accumulated Depreciation Net PPE Total Assets 95.000 Stockholders Equity (16) Common Stock Return Earnings Total SE $207,244 Total Liabilities & SE 26,225 (22) $190,391 $190,391 $207,244 (1) What are Total Cash Receipts from customers for January? 1 $48,000 $84,400 $64,080 $16,080 8 00:3645 (2) What are Total Purchases of Inventory for January? $40,460 $47,784 O $37,620 $28,584 (3) What are Total Cash Payments for Purchases of Inventory for February? $24,276 $40,460 $35,710 $40,650 (4) What is Total Commission Expense for January? $4,020 $2,412 $3,012 $5,424 1 1 (5) What is Total Insurance Expense for January? $0 $28,800 O $2,400 $1.200 OD 36 25 (6) What is the Total Cash Payment for Depreciation Expense for January? $25,000 $3,600 $0 $1,800 (7) What is Total Cash Payment for Insurance Expense for February? $0 $28,800 $1.200 $2,400 (8) What is Total Interest Expense for January? $800 $1,030 $1,830 (9) What is Total Cash Surplus (Deficit) for January? 1 $39,441 O $-11,553 $7,553 $-7,553 8 00.36.00 (10) What is Total Net Borrowing (Repayment) for February? $-39,441 O $-24,441 O $24,441 $23,000 (11) What is the Contribution Margin for February? $44,220 $55,220 O $100,400 O $33,663 (12) What is the balance of Cash on February 28? $15,447 $0 $16,000 O $15,000 1 (13) What is the balance of Accounts Receivable on February 28? O $80,320 $84,320 O $64,320 $48,000 0035.50 (14) What is the balance of Prepaid Insurance on January 31? $0 $26,400 O $27,600 $28,800 (15) What is the balance of Inventory on February 287 O $40,460 e $9,600 $6,324 $6,024 (16) What is the balance of Land on February 28? $8,800 $4,000 $0 $12.800 1 (17) What is the balance of Accumulated Depreciation, as reflected on the Balance Sheet, on January 31? O $ 1,800 $-28,600 O$ 26,800 $-23,200 00:35.35 (18) What is the balance of Accounts Payable on February 28? $ 11,434 $16,864 $16,184 $24,276 (19) What is the balance of Commissions Payable on January 31? O $2,412 $3,400 $3,012 $5,812 (20) What is the balance of Dividends Payable on January 317 $950 $0 $800 O $1.900 (20) What is the balance of Dividends Payable on January 31? 00:35:25 $950 $0 O $800 $1,900 (21) What is the balance of Long-Term Debt on January 31? $78,559 $80,000 $102,000 $103,000 (22) What is the balance of Retained Earnings on February 28? $58,837 $35,174 $68,837 $69,787