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    Problems - Cash Forecasting

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    Jennica Cruzado
    1. Bitter Pan Company's cash forecast for February shows expected cash receipts of $364,500 from customers and cash payments of $223,000 to suppliers, $61,000 for manufacturing overhead excluding depreciation, $82,500 for direct labor, and $42,000 for selling and administrative expenses. It also expects to purchase property for $70,000 and may need to borrow $40,000 to maintain a minimum $100,000 cash balance. 2. Art Break's expected cash receipts for Q3 are $246,000 for July, $234,200 for August, and $213,200 for September from cash and credit sales. 3. iHeat U's

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    Problems - Cash Forecasting

    Uploaded by

    Jennica Cruzado
    54 views4 pages
    1. Bitter Pan Company's cash forecast for February shows expected cash receipts of $364,500 from customers and cash payments of $223,000 to suppliers, $61,000 for manufacturing overhead excluding depreciation, $82,500 for direct labor, and $42,000 for selling and administrative expenses. It also expects to purchase property for $70,000 and may need to borrow $40,000 to maintain a minimum $100,000 cash balance. 2. Art Break's expected cash receipts for Q3 are $246,000 for July, $234,200 for August, and $213,200 for September from cash and credit sales. 3. iHeat U's

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    1. Bitter Pan Company's cash forecast for February shows expected cash receipts of $364,500 from customers and cash payments of $223,000 to suppliers, $61,000 for manufacturing overhead excluding depreciation, $82,500 for direct labor, and $42,000 for selling and administrative expenses. It also expects to purchase property for $70,000 and may need to borrow $40,000 to maintain a minimum $100,000 cash balance. 2. Art Break's expected cash receipts for Q3 are $246,000 for July, $234,200 for August, and $213,200 for September from cash and credit sales. 3. iHeat U's

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    54 views4 pages

    Problems - Cash Forecasting

    Uploaded by

    Jennica Cruzado
    1. Bitter Pan Company's cash forecast for February shows expected cash receipts of $364,500 from customers and cash payments of $223,000 to suppliers, $61,000 for manufacturing overhead excluding depreciation, $82,500 for direct labor, and $42,000 for selling and administrative expenses. It also expects to purchase property for $70,000 and may need to borrow $40,000 to maintain a minimum $100,000 cash balance. 2. Art Break's expected cash receipts for Q3 are $246,000 for July, $234,200 for August, and $213,200 for September from cash and credit sales. 3. iHeat U's

    Copyright:

    © All Rights Reserved
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    of 4

    Module 2

    Topic 3: Cash Forecasting

    Problem A February

    Cash balance, March 1


    ✓
    Bitter Pan Company has the following information for the month of February:
    P163,200
    Collections from customers 364,500
    Payment to suppliers 223,000
    Manufacturing Overhead 61,000 :
    Direct Labor → WAGES 82,500
    Selling and administrative expenses 42,000
    /

    }
    Bitter Pan pays wages in the month incurred. Manufacturing overhead includes P12,000
    for machinery depreciation but the amount for selling and administrative expenses is
    exclusive of depreciation. Additionally, Bitter Pan expects to buy a property for P70,000
    during February. Walter can borrow in increments of P10,000 and would like to maintain
    -

    a minimum cash balance of P100,000..


    -

    Depreciation ( Amortization (
    Bad debts non Cash
    Expenses
    -

    Required: Expense
    Prepare a cash forecast for the months of February. I

    Cash Balance , February 1 163,200


    Cash Receipts
    Add :
    collection customers 364,500
    from
    Less : cash Payment .

    Payment to
    fnppliers ( 223,000 )
    ( 49 ( 64000-12,00)
    Manufacturing Overhead ,) ooo

    Direct Labor ( 82,500)


    AZA Expenses ( 42,0007
    Property ( 70,000)

    cash Balance fat 28 ,


    .
    ÷
    Loans to be borrowed 40,000
    101,200
    Problem B
    Art Break, Co. makes 60 percent of its sales in cash. Credit sales are collected as follows:
    60 percent in the month of sale and 40 percent in the month following the sale. Art
    Break’s forecasted sales for the upcoming months follow:
    June 225,000
    July 250,000
    August 230,000
    September 210,000

    Required: Compute Art Break’s expected cash receipt for Quarter 3 (July, August and
    September).
    't sales
    Sales folds
    Cash sales -

    June July August September

    cash sales 1351000 1501000 138,000 126,000

    Credit Sales
    -541000 60,000
    boy -55,200 -50,400
    402 36,000 40,000 36,800
    -

    246,000 234200 2131200


    , , ,
    Problem C
    iHeat U Company is a retail company that sells hiking and outdoor gear specially made
    for the desert heat. It sells to individuals as well as local companies that coordinate
    adventure gateways in the desert for tourists. The following information is available for
    several months of the current year:

    Month Sales Purchases Cash Expenses Paid


    May P120,000 P90,000 P24,000

    17oz
    June 115,000 cash 95,000
    - 31,000
    July 160,000 or 150,000 38,250
    302 -

    August 145,000 80,000 34,700

    The majority of iHeat U’s sales (70 percent) are cash, but a few of the excursion
    companies purchase on credit. Of the credit sales, 40 percent are collected in the
    month of sale and 60 percent are collected in the following month. All of iHeat U’s
    purchases are on account with 55 percent paid in the month of purchase and 45
    percent paid the following month.

    Required:
    1. Prepare a schedule of cash receipts for June, July and August.
    2. Prepare a schedule of cash payments for June, July and August.

    ① June July
    May August
    cash sales 84,000 80,500 112,000 101,500
    Credit Sales 17,400
    14,400 13,800 19,200
    402 28,800
    602
    21,600 20,700
    -

    115,900 1571900 147,700

    May June July August


    ②
    cash Expenses Paid 24,000 31,000 38,250 34,700

    Purchases
    Payment on

    495500 521250 82,500 441000


    552
    40,500 42,750 67,500
    4th
    -

    123,750 163,500 146,200


    Problem D
    AUQ NA, Inc., manufactures bamboo picture frames that sell for $25 each. Each frame
    requires 4 linear feet of bamboo, which cost $2 per foot. Each frame takes
    approximately 30 minutes to build, and the labor rate averages $12.00 per hour. AUQ
    NA has the following inventory policies:
    • Ending finished goods inventory should be 40% of next month’s sales.
    • Ending raw materials inventory should be 30% of next month’s production.

    Expected units sales (frames) for the upcoming months follow:


    March 275
    April 250
    May 300
    June 400
    July 375
    August 425

    Variable manufacturing overhead is incurred at a rate of $0.30 per unit produced.


    Annual fixed manufacturing overhead is estimated to be $7,200 ($600 per month) for
    expected production of 4,000 units for the year. Selling and administrative expenses are
    estimated at $650 per month plus $0.60 per unit sold.

    AUQ NA, Inc., had $10,800 cash on hand on April 1. Of its sales, 80 percent is in cash. Of
    the credit sales, 50 percent is collected during the month of the sale and 50 percent is
    collected during the month following the sale.

    Of raw materials purchase, 80 percent is paid for during the month purchased and 20
    percent is paid in the following month. Raw materials purchases for March 1 totaled
    $2,000. All other operating costs are paid during the month incurred. Monthly fixed
    manufacturing overhead includes $150 depreciation. During April, AUQ NA plans to
    pay $3,000 for a piece of equipment.

    Prepare the following for AUQ NA, Inc for the second quarter (April, May and June).
    Include each month as well as the quarter 2 total for each of the following:
    1. Sales Forecast
    2. Production Forecast
    3. Raw Materials Production Forecast
    4. Direct Labor Forecast
    5. Manufacturing Overhead Forecast
    6. Cost of Goods Sold Forecast
    7. Selling and Administrative Expenses Forecast
    8. Cash Receipt Forecast
    9. Cash Payment Forecast
    10. Cash Forecast. Assume the company can borrow in increments of $1,000 to main
    a $10,000 minimum cash balance.

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