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Garden Sales, Inc., sells garden supplies. Management is planning Its cash needs for the second quarter. The compa usually has to borrow money during thls
Garden Sales, Inc., sells garden supplies. Management is planning Its cash needs for the second quarter. The compa usually has to borrow money during thls quarter to support peak sales of lawn care equlpment, which occur during The following information has been assembled to assist in preparing a cash budget for the quarter: a Budgeted monthly absorption costing income statements for AprilJuly are: "Includes $ of depreciation each month. b Sales are for cash and on account. c Sales on account are collected over a threemonth period with collected in the month of sale; collected it the first month following the month of sale; and the remaining collected in the second month following the month of sale. February's sales totaled $ and March's sales totaled $ d Inventory purchases are paid for within days. Therefore, of a month's inventory purchases are paid for in th month of purchase. The remaining is pald in the following month. Accounts payable at March for inventory purchases during March total $ e Each month's ending imventory must equal of the cost of the merchandise to be sold in the following month. merchandise inventory at March is $ t Dlvidends of $ will be declared and paid in April. Land costing $ will be purchased for cash in May. The cash balance at March is $; the company must maintain a cash balance of at least $ at the en of each month. L The company has an agreement with a local bank that allows the company to borrow in increments of $ at th beginning of each month, up to a total loan balance of $ The interest rate on these loans per month and for simplicity we will assume that interest is not compounded. The company would, as far as it is able, repay th ioan plus accumulated interest at the end of the quarter The company's president is interested in knowing how reducing inventory levels and collecting accounts recelvable sooner will impact the cash budget. He revises the cash collection and ending inventory assumptions as follows: a Sales continue to be for cash and on credit. However, credit sales from April, May, and June are collecte over a threemonth period with collected in the month of sale, collected in the month following sale, and in the second month following sale. Credit sales from February and March are collected during the second quarter using the collection percentages specified in the main section. b The company maintains Its ending Inventory levels for April, May, and June at of the cost of merchandlse to bi sold in the following month. The merchandlse inventory at March remains $ and accounts payable for inventory purchases at March remains $ Required: Using the president's new assumptions in a above, prepare a schedule of expected cash collections for April, May and June and for the quarter In total. Using the president's new assumptions in b above, prepare the following for merchandise inventory: a A merchandlse purchases budget for Apri, May, and June. b A schedule of expected cash disbursements for merchandise purchases for April, May, and June and for the quart In total. Using the president's new assumptions, prepare a cash budget for April, May, and June, and for the quarter in total. Complete this question by entering your answers in the tabs below. Using the president's new assumptions in b above, prepare the following for merchandise inventory, a merchandise purchases budget for April, May, and June.
Garden Sales, Inc., sells garden supplies. Management is planning Its cash needs for the second quarter. The compa
usually has to borrow money during thls quarter to support peak sales of lawn care equlpment, which occur during
The following information has been assembled to assist in preparing a cash budget for the quarter:
a Budgeted monthly absorption costing income statements for AprilJuly are:
"Includes $ of depreciation each month.
b Sales are for cash and on account.
c Sales on account are collected over a threemonth period with collected in the month of sale; collected it
the first month following the month of sale; and the remaining collected in the second month following the
month of sale. February's sales totaled $ and March's sales totaled $
d Inventory purchases are paid for within days. Therefore, of a month's inventory purchases are paid for in th
month of purchase. The remaining is pald in the following month. Accounts payable at March for inventory
purchases during March total $
e Each month's ending imventory must equal of the cost of the merchandise to be sold in the following month.
merchandise inventory at March is $
t Dlvidends of $ will be declared and paid in April.
Land costing $ will be purchased for cash in May.
The cash balance at March is $; the company must maintain a cash balance of at least $ at the en
of each month.
L The company has an agreement with a local bank that allows the company to borrow in increments of $ at th
beginning of each month, up to a total loan balance of $ The interest rate on these loans per month
and for simplicity we will assume that interest is not compounded. The company would, as far as it is able, repay th
ioan plus accumulated interest at the end of the quarter
The company's president is interested in knowing how reducing inventory levels and collecting accounts recelvable
sooner will impact the cash budget. He revises the cash collection and ending inventory assumptions as follows:
a Sales continue to be for cash and on credit. However, credit sales from April, May, and June are collecte
over a threemonth period with collected in the month of sale, collected in the month following sale, and
in the second month following sale. Credit sales from February and March are collected during the second
quarter using the collection percentages specified in the main section.
b The company maintains Its ending Inventory levels for April, May, and June at of the cost of merchandlse to bi
sold in the following month. The merchandlse inventory at March remains $ and accounts payable for
inventory purchases at March remains $
Required:
Using the president's new assumptions in a above, prepare a schedule of expected cash collections for April, May
and June and for the quarter In total.
Using the president's new assumptions in b above, prepare the following for merchandise inventory:
a A merchandlse purchases budget for Apri, May, and June.
b A schedule of expected cash disbursements for merchandise purchases for April, May, and June and for the quart
In total.
Using the president's new assumptions, prepare a cash budget for April, May, and June, and
for the quarter in total.
Complete this question by entering your answers in the tabs below.
Using the president's new assumptions in b above, prepare the following for merchandise
inventory, a merchandise purchases budget for April, May, and June.
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