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Master Budget.9

The document contains 30 multiple choice questions related to budgeting and cash flow projections for various companies. Specifically: - Question 22 asks how much money a grooming business called Hair Stars should borrow in May based on its cash budget. - Question 23 asks for the projected balance of accounts receivable for Joy Company at the end of July based on given receivables information. - Question 24 asks for the estimated cash disbursements for inventories for Balagtas Company in January 1983 based on given sales and inventory information.

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Hiraya Manawari
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808 views3 pages

Master Budget.9

The document contains 30 multiple choice questions related to budgeting and cash flow projections for various companies. Specifically: - Question 22 asks how much money a grooming business called Hair Stars should borrow in May based on its cash budget. - Question 23 asks for the projected balance of accounts receivable for Joy Company at the end of July based on given receivables information. - Question 24 asks for the estimated cash disbursements for inventories for Balagtas Company in January 1983 based on given sales and inventory information.

Uploaded by

Hiraya Manawari
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as RTF, PDF, TXT or read online on Scribd
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MASTER BUDGET

PROBLEMS
22. The following information was extracted from the May Cash Budget of Hair Stars, a
groom pad for men and women:
Budget of Hair Stars, a groom pad for men and women:
Excess of cash available over disbursements P 800
Cash balance, May 1 10,100
Total cash disbursement for May 32,500
The business can only borrow money in round figures of P1,000 amounts. If the business
is required to maintain a minimum cash balance of P10,000, how much money should be
borrowed in May?
a. P9,200 b. P10,000 c. P22,000 d. P23,000

23. In preparing its budget for July, 1997, Joy Company has the following accounts
receivable information available:
Accounts receivable at June 30, 19x7P350,000
Estimated credit sales for July P400,000
Estimated collections in July for credit sales in July and prior months P320,000
Estimated write-offs in July for uncollectible credit sales P 16,000
Estimated provision for doubtful accounts for credit sales in July P 12,000
What is the projected balance of accounts receivable at July 31, 19x7?
a. P402,000. b. P430,000. c. P414,000. d. P426,000.

24. The January 1983 budget of Balagtas Company is being prepared by the budget officer of
the company. In the preparation of the cash budget the estimates for the month of January, 1983
include the following:
Sales P937,500
Gross profit (based on sales) 25%
Increase in inventories P75,000
Decrease in trade accounts payable P30,000
The estimated cash disbursements for inventories in January, 1983 is
a. P598,125 b. P733,125 c. P748,125 d. P808,125

25. GLORIA CORP. has the following budget estimates for its second year of operations:
Projected sales – P3,500,000
Projected net income before tax – 12% of sales
Estimated selling and administrative expenses – 25% of sales
Direct labor and factory overhead are budgeted at 70% of the total manufacturing cost.
Inventories are estimated as follows:
Raw materials Goods in process Finished goods
Beginning P220,000 P250,000 P350,000
Ending 270,000 300,000 420,000
The estimated purchases of raw materials would be
a. P967,500 b. P732,500 c. P697,000 d. P747,500
26. Digna Company had the following transactions in 19x7, their first year of operations
Sales (90% collected in 1997)P1,500,000
Bad debts write-offs 60,000
Disbursements for cost and expenses 1,200,000
Disbursement for income taxes 90,000
Purchase of fixed assets 400,000
Depreciation of fixed assets 80,000
Proceeds from issuance of common stock 500,000
Proceeds from short-term borrowings 100,000
Payments on short-term borrowings 50,000
What is the cash balance at December 31, 19x7?
a. P210,000. b. P150,000. c. P280,000. d. P170,000

Questions 27 thu 30 are based on the following information.


For purposes of preparing the cash projections and other budget estimates for the third quarter of
1988, the following information is presented to you by the management of Virgo Corporation:
Second Quarter Sales Data: Pesos Units
April P 530,000 10,600
May 550,000 11,000
June 570,000 11,400

Projected sales for the next four months Pesos Units


July 540,000 10,800
August 550,000 11,000
September 560,000 11,200
October 580,000 11,600
All sales are on charge basis and billed at the end of the month. A 5% discount is given on
collections within the 15 days from billing date. Sales collections are generally made as follows:
70% within the month following the billing date with 40% of this being collected within the
discount period.
27% on the second month following the billing date.
3% considered uncollectible
Merchandise purchases are generally paid as follows:
50% within the month they are incurred.
50% after the month they are incurred
Ending inventory in units (cost per unit is P40) is 30% higher than the following month’s sales in
units. Operating expenses are on cash basis and are estimated to be 15% of the current month’s
sales including monthly depreciation of P10,000.
As of June 30, 1988, Accounts Receivable balance was P630,000 and Merchandise Inventory
was P565,000.

27. The budgeted cash collections for the month of July would be
a. P547,500 b. P539,520 c. P556,020 d. P391,020

28. The budgeted cash payments of the month of September would be


a. P518,000 b. P533,600 c. P468,800 d. P459,600

29. The projected net income for September would be


a. P122,200 b. P112,000 c. P28,000 d. P38,000

30. The balance of accounts receivable at the end of July, assuming that no uncollectible
accounts are written off for July would be (VD)
a. P622,500 b. P645,660 c. P613,980 d. P630,480

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