16. Maine Co. makes payments for purchases 30% during the month of purchase and the remainder the following month. April purchases are projected to be P 80,000; May purchases will be P 120,000. What will be the cash payments on account for May?

a.

P 36,000

c.

P 84,000

b.

P 54,000

d.

P 92,000

17. Nebraska Company, a merchandising firm, is preparing its master budget and has gathered the following data to help budget cash disbursements:

Cost of goods sold

P 1,680,000

Desired decrease in inventories

70,000

Desired decrease in accounts payable

150,000

All of the accounts payables are for inventory purchases and all inventories are purchased on account. What are the estimated cash disbursements for inventories for the budget period?

a.

P 1,460,000

c.

P 1,900,000

b.

P 1,600,000

d.

P 1,760,000

18. Alabama Consortium is constructing a corporate planning model. Cash sales are 30% of the company's sales, with the remainder subject to the following collection pattern:

One month after sale

60%

Two months after sale

30%

Three months after sale

8%

Uncollectible

2%

If Sn is defined as total sales in month 'n,' which one of the following expressions correctly describes Alabama's collection on account in any given month?

a.

0.6 S n-1 + 0.3 S n-2 + 0.08 S n-3

c.

0.42 S n-1 + 0.21 S n-2 + 0.056 S n-3

b.

0.42 S n+1 + 0.21 S n+2 + 0.056 S n+3

d.

0.6 S n-1 + 0.3 S n-2 + 0.08 S n-3 - 0.02 S

Items 19 and 20 are based on the following information

Operational budgets are used for planning and controlling its business activities. Data regarding a company's sales for the last 6 months of the year and its projected collection patterns are shown below:

Forecasted sales

July

P 775,000

August

750,000

September

825,000

October

800,000

November

850,000

December

900,000

Types of sales

Cash sales

20%

Credit sales

80%

Collection Pattern for Credit Sales

In the month of sale

40%

In the first month following the sale

57%

Uncollectible

3%

The cost of merchandise averages 40% of its selling price. The company's policy is to maintain an inventory equal to 25% of the next month's forecasted sales. The inventory balance at cost is P 80,000 as of June 30.

19. The budgeted cost of the company's purchases for the month of August would be

a.

P 302,500

c.

P 307,500

b.

P 305,000

d.

P 318,750

20. The company's total cash receipts from sales and collections on account that would be budgeted for the month of September would be

a.

P 757,500

c.

P 793,800

b.

P 771,000

d.

P 856,500

21. The cash receipts budget includes

a.

Funded depreciation

c.

Extinguishment of debt

b.

Operating supplies

d.

Loan proceeds

22. The Pennsylvania Company is preparing its cash budget for the month of May. The following information is available concerning its accounts receivable:

Estimated credit sales for May

P 200,000

Actual credit sales for April

150,000

Estimated collections in May for credit sales in May

20%

Estimated collections in May for credit sales in April

70%

Estimated collections in May for credit sales prior to April

P 12,000

Estimated write-offs in May for uncollectible credit sales

8,000

Estimated provision for bad debts in May for credit sales in May

7,000

What are the estimated cash receipts from accounts receivable collections in May?

a.

P 142,000

c.

P 150,000

b.

P 149,000

d.

P 157,000

23. Which one of the following budgets is the last item to be prepared under a normal budget preparation process?

a.

Direct labor budget

c.

Cash budget

b.

Cost of goods sold budget

d.

Manufacturing overhead budget

24. The cash budget should help to ensure

a.

That enough cash is on hand at all times to satisfy maximum cash requirements

b.

Sufficient liquidity without an excess amount of idle cash

c.

That cash dividends can be paid every quarter

d.

That sufficient cash is available to pay salaries, even if it means borrowing the money

25. The cash budget for 2021 would be affected in some way by all of the following, except

a.

A cash dividend declared in 2020 for payment in 2021.

b.

A cash dividend declared in 2021 for payment in 2022.

c.

Interest expense on loans taken out and repaid during 2021.

d.

The sales forecast for the first month in 2022.