Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

6-43 cash budgeting, budgeted balance sheet (Continuation 016-42) (Appendix) Refer to the information in Problem 6-42. Budgeted balances at January 31, 2018 are as follows:

6-43 cash budgeting, budgeted balance sheet (Continuation 016-42) (Appendix)

Refer to the information in Problem 6-42.

Budgeted balances at January 31, 2018 are as follows:

Cash ?

Accounts receivable ?

Inventory ?

Property. plant and equipment (net) $1,175,600

Accounts payable ?

Long-term liabilities 182,000

Stockholders' equity ?

Selected budget information for December 2017 follows:

Cash balance, December 31, 2017 $124,000

Budgeted sales 1,650,000

Budgeted materials purchases 820,000

Customer invoices are payable within 30 days. From past experience, Skulass accountant projects of invoices will be collected in the month invoiced, and 60% will be collected in the following month.

Accounts payable relates only to the purchase of direct materials. Direct materials are purchased credit with 50% of direct materials purchases paid during the month of the purchase, and 50% paid in the month following purchase.

Fixed manufacturing overhead costs include $64,000 of depreciation costs and fixed nonmanufacturing overhead costs include $10,000 of depreciation costs. Direct manufacturing labor and the remaining manufacturing and nonmanufacturing overhead costs are paid monthly.

All property, plant, and equipment acquired during January 2018 were purchased on credit and did not entail any outflow of cash.

There were no borrowings or repayments with respect to long-term liabilities in January 2018.

On December 15, 2017, Skulas's board of directors voted to pay a $160,000 dividend to stockholders on

January 31, 2018.

1. Prepare a cash budget for January 2018. Show supporting schedules for the calculation of collection

of receivables and payments of accounts payable, and for disbursements for fixed manufacturing and

nonmanufacturing overhead.

2. Skulas is interested in maintaining a minimum cash balance of $120,000 at the end of each month. Will Skulas be in a position to pay the S160,000 dividend on January 31?

3. Why do Skulas's managers prepare a cash budget in addition to the revenue, expenses, and operating

income budget?

4. Prepare a budgeted balance sheet for January 31, 2018 by calculating the January 31, 2018 balances

in (a) cash (b) accounts receivable (c) inventory (d) accounts payable and (e) plugging in the balance

for stockholders' equity.

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

Environmental Health And Safety Audits A Compendium Of Thoughts And Trends

Authors: Lawrence B. Cahill

2nd Edition

1598889737, 978-1598889734

More Books

Students also viewed these Accounting questions

Question

Compare and contrast verbal and nonverbal codes

Answered: 1 week ago

Question

Define and discuss the nature of ethnocentrism and racism

Answered: 1 week ago

Question

Define and discuss racial and ethnic stereotypes across cultures

Answered: 1 week ago