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1 1 Exercise 8-11 (Algo) Cash Budget Analysis [LO8-8) 50 points A cash budget, by quarters, is given below for a retail company (000 omitted). The company requires a minimum cash balance of at least $8,000 to start each quarter. Fill in the missing amounts. (Enter your answers in thousands of dollars. Cash deficiencies and Repayments should be indicated by a minus sign.) Quarter (000 omitted) 1000 omitted) Year 1 $ 9 terences 103 347 70 42 52 34 32 30 103 14 8 17 49 2 2 2 2 Cash balance, beginning Add collections from customers Total cash available Less disbursements Purchase of inventory Selling and administrative expenses Equipment purchases Dividends Total disbursements Excess (deficiency) of cash avalable over disbursements Financing Borrowings Repayments (including interest) Total financing Cash balance, ending interest will lol 51.000 for the year 94 (8) 14 10 (21) 2 100 Required information Schedules of Expected Cash Collections and Disbursements; Income Statement; Balance Sheet (LO8-2, LO8-4, LO8-9, LO8-10) (The following information applies to the questions displayed below) Beech Corporation is a merchandising company that is preparing a master budget for the third quarter of the calendar year. The company's balance sheet as of June 30th is shown below Beech Corporation Balance Sheet June 30 Assets Cash Accounts receivable Inventory Plant and equipment, not of depreciation Total asta Les and stockholdere quity Acounts payable Costo Ratinding Total and stockholders' $ 94,000 145,000 59.400 222.000 5520,400 #83,000 331.000 106.400 $ 520,000 2 Exercise 8-13 REV (Algo) 100 Don Beech's managers have made the following additional assumptions and estimates. . Pe 1. Estimated sales for July August September, and October will be $330,000 $350.000, $340,000 and $360,000, respectively 2. All sales are on credit and all credit sales are collected. Each month's credit sales are collected 45% in the month of sale and 55% in the month following the sale. All of the accounts receivable at June 30 will be collected in July 3. Each month's ending Inventory must equal 20% of the cost of next month's sales. The cost of goods sold is 60% of sales. The company pays for 30% of its merchandise purchases in the month of the purchase and the remaining 70% in the month following the purchase. All of the accounts payable at June 30 will be paid in July 4. Monthly selling and administrative expenses are always $42.000. Each month $6,000 of this total amount is depreciation expense 5. The company does not plan to borrow money or pay or declare dividends during the quarter ended September 30. The company does not plan to issue any common stock or repurchase its own stock during the quarter ended September 30 Required: 1. Prepare a schedule of expected cash collections for July, August, and September. Also compute total cash collections for the quarter 2a. Prepare a merchandise purchases budget for July, August, and September Also compute total merchandise purchases for the quarter ended September 30, 2.b. Prepare a schedule of expected cash disbursements for merchandise purchases for July August, and September. Also compute total cash disbursements for merchandise purchases for the quarter ended September 30 3 Problem 8-23 (Algo) Schedule of Expected Cash Collections: Cash Budget (L08-2, L08-8) 100 points The president of the retailer Prime Products has just approached the company's bank with a request for a $79,000, 90-day loan. The purpose of the loan is to assist the company in acquiring inventories. Because the company has had some difficulty in paying off its loans in the past, the loan officer has asked for a cash budget to help determine whether the loan should be made. The following data are available for the months April through June, during which the loan will be used: a. On April 1, the start of the loan period, the cash balance will be $16,500, Accounts receivable on April 1 will total $190,400, of which $163,200 will be collected during April and $21.760 will be collected during May. The remainder will be uncollectible b. Past experience shows that 30% of a month's sales are collected in the month of sale, 60% in the month following sale, and 8% in the second month following sale. The other 2% is bad debts that are never collected. Budgeted sales and expenses for the three- month period follow Sales all on account) Merchandise purchases Payroll Lease payment Marts Equipment purchase Depreciation April May $312,000 $420,000 $319,000 $ 204,000 $162.000 178,500 $ 24,000 5 24.000 5 18,900 $24.00 $ 24,400 24.000 579,200 $ 79,200 $ 74,480 + 70.000 $ 17,200 $ 17,200 $ 17,200 c Merchandise purchases are paid in full during the month following purchase. Accounts payable for merchandise purchases during March, which will be paid in April total $160,000 din preparing the cash budget assume that the $79,000 loan will be made in April and repaid in June Interest on the loan will total $1,140 3 Merchandise purchases are paid in full during the month following purchase. Accounts payable for merchandise purchases during la preparing the cash budget assume that the $79,000 loan will be made in April and repaid in June, Interest on the loan will total $1.140 100 points Required: 1 Calculate the expected cash collections for April, May, and June, and for the three months in total 2. Prepare a cash budget, by month and in total, for the three-month period Complete this question by entering your answers in the tabs below. Required 1 Required 2 Calculate the expected cash collections for April, May, and June and for the three months in total Schedule of Expected Cash Collections April June May Quarter Total cash collections Required 2 >