Q1 The LaGrange Corporation had the following budgeted sales for the first half of the current year:

		Cash Sales		Credit Sales
January	$	50,000	$	150,000
February	$	55,000	$	170,000
March	$	43,000	$	130,000
April	$	38,000	$	123,000
May	$	48,000	$	200,000
June	$	80,000	$	170,000

The company is in the process of preparing a cash budget and must determine the expected cash collections by month. To this end, the following information has been assembled:

Collections on sales:

50% in month of sale

40% in month following sale

10% in second month following sale

The accounts receivable balance on January 1 of the current year was $65,000, of which $42,000 represents uncollected December sales and $23,000 represents uncollected November sales.

What is the budgeted accounts receivable balance on May 31?

Garrison 16e Rechecks 2017-10-03, 2017-10-31

Multiple Choice

• $201,600

• $89,300

• $100,000

• $112,300

Q3 Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow:

• Sales are budgeted at $254,000 for November, $294,000 for December, and $221,000 for January.
• Collections are expected to be 60% in the month of sale and 40% in the month following the sale.
• The cost of goods sold is 80% of sales.
• The company desires to have an ending merchandise inventory at the end of each month equal to 90% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase.
• Other monthly expenses to be paid in cash are $15,600.
• Monthly depreciation is $26,500.
• Ignore taxes.

Balance Sheet October 31
Assets
Cash	$	32,000
Accounts receivable		82,500
Merchandise inventory		182,880
Property, plant and equipment, net of $624,000 accumulated depreciation		916,000
Total assets	$	1,213,380
Liabilities and Stockholders' Equity
Accounts payable	$	250,000
Common stock		751,000
Retained earnings		212,380
Total liabilities and stockholders' equity	$	1,213,380

The cost of December merchandise purchases would be:

Garrison 16e Rechecks 2017-10-03, 2017-10-31

Multiple Choice

• $203,200

• $182,640

• $159,120

• $235,200

Q4 Teel Printing uses two measures of activity, press runs and book set-ups, in the cost formulas in its budgets and performance reports. The cost formula for wages and salaries is $3,900 per month plus $409 per press run plus $959 per book set-up. The company expected its activity in July to be 215 press runs and 122 book set-ups, but the actual activity was 212 press runs and 121 book set-ups. The actual cost for wages and salaries in July was $206,980.

The spending variance for wages and salaries in July would be closest to:

Multiple Choice

• $333 F

• $333 U

• $1,853 U

• $1,853 F