Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Mary and Kay, Inc., a distributor of cosmetics throughout Florida, is in the process of assembling a cash budget for the first quarter of 20x1.

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Mary and Kay, Inc., a distributor of cosmetics throughout Florida, is in the process of assembling a cash budget for the first quarter of 20x1. The following information has been extracted from the company's accounting records: All sales are on account. Sixty percent of customer accounts are collected in the month of sale; 30 percent are collected in the following month. Uncollectibles amounting to 10 percent of sales are anticipated, and management believes that only 20 percent of the accounts outstanding on December 31, 20x0, will be recovered and that the recovery will be in January 20x1. Sixty percent of the merchandise purchases are paid for in the month of purchase; the remaining 40 percent are paid for in the month after acquisition The December 31, 20x0, balance sheet disclosed the following selected figures: cash, $55,000; accounts receivable, $220,000: and accounts payable, $77,000. Mary and Kay, Inc. maintains a $55.000 minimum cash balance at all times. Financing is available and retired) in $1,000 multiples at an 9 percent interest rate, with borrowings taking place at the beginning of the month and repayments occurring at the end of the month. Interest is paid at the time of repaying principal and computed on the portion of principal repaid at that time. Additional data: Sales revenue Merchandise purchases Cash operating costs Proceeds from sale of equipment January $560,000 380,000 104,000 February $650,000 410,000 83,000 March $665,000 530,000 146,000 26,000 Required: 1. Prepare a schedule that discloses the firm's total cash collections for January through March. 2. Prepare a schedule that discloses the firm's total cash disbursements for January through March. 3. Prepare a schedule that summarizes the firm's financing cash flows for January through March. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare a schedule that discloses the firm's total cash collections for January through March. January February March Collection of accounts receivable Collection of January sales Collection of February sales Collection of March sales Sale of equipment Total cash collections Required Required 2 > $ 0 $ 0 $ 0 Required 1 Required 2 Required 3 Prepare a schedule that discloses the firm's total cash disbursements for January through March. January February March Payment of accounts payable Payment of January purchases Payment of February purchases Payment of March purchases Cash operating costs Total cash disbursements 0 $ 0 $ $ 0 Required 1 Required 2 Required 3 Prepare a schedule that summarizes the firm's financing cash flows for January through March. 0 January February March Beginning cash balance Total receipts Subtotal $ 0 $ 0 $ Less: Total disbursements Cash excess (deficiency) before financing $ 0 $ 0 $ Financing: Borrowing to maintain $55,000 balance Loan principal repaid Loan interest paid Ending cash balance $ 0 $ 0 $ 0

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

Using QuickBooks Accountant 2018 For Accounting

Authors: Glenn Owen

16th Edition

0357042085, 9780357042083

More Books

Students also viewed these Accounting questions

Question

Describe various competitive compensation policies.

Answered: 1 week ago