Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

15 points You are appointed as an accountant by Al Busaiteen Sales, Inc. that sells garden supplies. Management is planning its cash needs for the

image text in transcribed
image text in transcribed
15 points You are appointed as an accountant by Al Busaiteen Sales, Inc. that sells garden supplies. Management is planning its cash needs for the second quarter. The company wally must borrow money during this quarter to support peak sales of lawn care equipment, which occur during May The head of department anked you to prepare a cash budget for the quarter to dus end, you have worked with accounting and other areas to gather the information assembled below Budgeted monthly absorption costing income statements for April-July Sales Cost of voeds sold Cross Barn April $540,000 $378,000 $162.000 May $810,000 $567.000 $243,000 June $450,000 $315.000 $135.000 July $360.000 $22.000 $108.000 580,500 $129,950 $65,785 $77.760 Total seling and administrative expenses Net operating income 581300 $113,050 569.215 $30 240 You have gathered the following additional information 1. All sales are on credit. Only 10% of a month's sales are collected in the month of ule. An additional 70% in collected in the following month, and the remaining 20% is collected in the second month following sale February's sales totaled $180,000, ad Marchsales totaled $270.000 2.50% of a month's mentary purchases me pad for in the month of purchase. The remaining 50% paid in the following month Accounts payable at March 31 for inventory purchases during March total $126,000 3. Each month's ende inventory must equal 20% of the cost of the merchandise to be sold in the following month The merchandise inventory March 31 $81.400 Dividends of $40,000 will be declared and paid in April 5. Land costing $16,000 will be purchased for cash in May & Selling and administrative expense includes $20.000 of depreciation each month 7. The cash balance at March 31 552,000, the company maintain a cash bulance of at $50,000 at the end of each month All be done at the beginning of a month any payments are made at the end of the quarter The company has an artment with a local bank that allows the company to borrow any amount at the beginning of each month, at interest rate 19 per month an, Mercat fate Required: 1. Prepare a schedule of expected cash collections for April, May, and June, and for the quarter in total. [3 marks] 2. Prepare a merchandise purchases budget for April May, and June (4 marks] 3. Prepare a schedule of expected cash disbursements for merchandise purchases for April May, and June, and for the quarter in total [3 marks] 4. Prepare a cash budget for April, May, and June as well as in total for the quarter [6 marks]

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Audit Workbook

Authors: Azhar Ul Haque Sario

1st Edition

B0C9SG1YC6, 979-8851207891

More Books

Students also viewed these Accounting questions

Question

Find retained earnings for 2022.

Answered: 1 week ago