Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Required information [The following information applies to the questions displayed below.] Hamby Corporation is a merchandising company that is preparing a master budget for the

Required information

[The following information applies to the questions displayed below.]

Hamby Corporation is a merchandising company that is preparing a master budget for the third quarter of the calendar year. The companys balance sheet as of June 30th is shown below:

Hamby Corporation
Balance Sheet
June 30
Assets
Cash $ 95,000
Accounts receivable 142,000
Inventory 54,000
Plant and equipment, net of depreciation 225,000
Total assets $ 516,000
Liabilities and Stockholders Equity
Accounts payable $ 86,000
Common stock 332,000
Retained earnings 98,000
Total liabilities and stockholders equity $ 516,000

The company managers have made the following additional assumptions and estimates:

  1. Estimated sales for July, August, September, and October will be $360,000, $380,000, $370,000, and $390,000, respectively.

  2. All sales are on credit and all credit sales are collected. Each months credit sales are collected 35% in the month of sale and 65% in the month following the sale. All of the accounts receivable at June 30 will be collected in July.

  3. Each months ending inventory must equal 25% of the cost of next months sales. The cost of goods sold is 60% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts payable at June 30 will be paid in July.

  4. Monthly selling and administrative expenses are always $48,000. Each month $7,000 of this total amount is depreciation expense and the remaining $41,000 relates to expenses that are paid in the month they are incurred.

  5. The company does not plan to borrow money or pay or declare dividends during the quarter ended September 30. The company does not plan to issue any common stock or repurchase its own stock during the quarter ended September 30.

How much is the Company's expected cash disbursement for merchandise in the month of July?

Multiple Choice

  • $173,600

  • $86,000

  • $87,600

  • $131,400

can you also answer these?

How much is the Company's expected merchandise purchases in the month of September?

How much is the Company's expected Net Operating Income for the quarter ending on September 30?

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_2

Step: 3

blur-text-image_3

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

The Employers Guide To Surviving Payroll And Human Resources Audits 2019

Authors: Paul E Love

1st Edition

1073422771, 978-1073422777

More Books

Students also viewed these Accounting questions

Question

Find the value of permutation. 9P4

Answered: 1 week ago

Question

Write the NLATLAB code to extract the year'2023i from 5

Answered: 1 week ago