Q1) Pt a:
Pt b:
Assume the cash balance at November 1 will be $72,000. It is the company's policy to maintain a minimum cash balance of $50,000 at the end of each month. Cash receipts (from cash sales and collection of accounts receivable) are projected to be $508,000 for November and $439,000 for December. Cash disbursements (sales commissions, advertising, delivery expense, wages, utilities, etc.) prior to financing activity are scheduled to be $432,500 in November and $540,000 in December. Short-term borrowing, when needed, is done at the beginning of the month in increments of $1,000. The annual interest rate on any such loans is estimated to be 12%. Interest on any outstanding short-term loans is paid in cash at the end of the month. Repayments of principal (if any) are assumed to occur at the end of the month. As of November 1, the company has a $50,000 long-term loan from the local bank. This loan, including interest (at 12% per year) for the month of November, is payable at the end of November. Required: Use the preceding information to prepare the cash budget for November and December. (Hint: The December 31 cash balance should be $50,450.) (Amounts to be deducted should be entered with a minus sign.) Answer is complete but not entirely correct. Hartz & Co. Cash Budget For November and December November December 72,000 $ 198,000 X Cash balance, beginning Add: Cash receipts Total cash available 439,000 508,000 580,000 432,500 637,000 540,000 Cash disbursements, prior to financing Add: Minimum cash balance 50,000 50,000 482,500 97,500 590,000 47,000 X 67,000 X Total cash needed Excess (deficiency of) cash, before financing effects Financing: Short-term borrowing, beginning of month Repayments (long-term loan principal), end of month Cash interest, end of month Total effects of financing Ending cash balance 50,000 X 0 670 X 500 X 50,500 198,000 $ 67,670 164,670 White Corporation's budget calls for the following sales for next year: Quarter 1 Quarter 2 92,000 units 79,000 units Quarter 3 Quarter 4 65,600 units 96,400 units Each unit of the product requires 2 pounds of direct materials. The company's policy is to begin each quarter with an inventory of product equal to 5% of that quarter's estimated sales requirements and an inventory of direct materials equal to 20% of that quarter's estimated direct materials requirements for production. Required: 1. Determine the production budget for the second quarter. 2. Determine the materials purchases budget for the second quarter. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Determine the materials purchases budget for the second quarter. 78,330 2 WHITE CORPORATION Budgeted Purchases of Direct Materials (In lbs.) 2nd Quarter Budgeted production Direct materials (lbs.) per unit produced Direct materials needed in production Desired ending inventory of direct materials (lbs.) Total direct materials needed Beginning inventory of direct materials Budgeted purchases of direct materials (lbs.) 156,660 156,660 156,660
