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Prepare cash budget for the Topeka Corporation for 20x1-20x3 using the adjusted net income approach. Managers at the Topeka Corporation have just completed a long-range
Prepare cash budget for the Topeka Corporation for 20x1-20x3 using the adjusted net income approach.
Managers at the Topeka Corporation have just completed a long-range operations budget for 20x1-20x3. They are interested in their ability to buy fixed assets in 20 and 20x3 from cash generated by the business. They need tentative cash budgets for 20xi-20x3 to evaluate the situation. The following information is available: Condensed operations Budgets Topeka Corporation 20xi 20X3 Sales $5,000,000 $6,000,000 $6,500,000 operating expenses 4,000,000 5,000,000 6,000,000 20xi 20x2 20X3 Depreciation 500,000 500,000 500,000 Income before taxes 500,000 500,000 Income tax expense 200.000 Net income s 300,000 300,000 -0- *The income tax expense is recorded on the books only. The amount paid each year is as follows: 20X3 Income tax liability for each year s 150.000 s 150,000 50,000 Increase in accounts receivable 10,000 20,000 10,000 Increase in accounts payable 5,000 15,000 20,000 Increase in inventories 5000 Expected distributions to partners (owners) 100,000 110,000 120,000
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