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    Homework Topic 6: EXERCISE 8-1 Schedule of Expected Cash Collections

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    khetam
    The document contains information about Midwest Products, a wholesale distributor of leaf rakes. It provides budgeted sales figures for July, August, and September, as well as historical cash collection rates. It then asks to prepare a schedule of expected cash collections for the third quarter based on this information. It also contains information about Crystal Telecom's sales projections and inventory requirements to prepare a production budget. Finally, it outlines Forest Outfitters' budgeted cash flows and cash balances to prepare a cash budget for the upcoming fiscal year.

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    Homework Topic 6: EXERCISE 8-1 Schedule of Expected Cash Collections

    Uploaded by

    khetam
    399 views3 pages
    The document contains information about Midwest Products, a wholesale distributor of leaf rakes. It provides budgeted sales figures for July, August, and September, as well as historical cash collection rates. It then asks to prepare a schedule of expected cash collections for the third quarter based on this information. It also contains information about Crystal Telecom's sales projections and inventory requirements to prepare a production budget. Finally, it outlines Forest Outfitters' budgeted cash flows and cash balances to prepare a cash budget for the upcoming fiscal year.

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    H.W6

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    The document contains information about Midwest Products, a wholesale distributor of leaf rakes. It provides budgeted sales figures for July, August, and September, as well as historical cash collection rates. It then asks to prepare a schedule of expected cash collections for the third quarter based on this information. It also contains information about Crystal Telecom's sales projections and inventory requirements to prepare a production budget. Finally, it outlines Forest Outfitters' budgeted cash flows and cash balances to prepare a cash budget for the upcoming fiscal year.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    399 views3 pages

    Homework Topic 6: EXERCISE 8-1 Schedule of Expected Cash Collections

    Uploaded by

    khetam
    The document contains information about Midwest Products, a wholesale distributor of leaf rakes. It provides budgeted sales figures for July, August, and September, as well as historical cash collection rates. It then asks to prepare a schedule of expected cash collections for the third quarter based on this information. It also contains information about Crystal Telecom's sales projections and inventory requirements to prepare a production budget. Finally, it outlines Forest Outfitters' budgeted cash flows and cash balances to prepare a cash budget for the upcoming fiscal year.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
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    The passage discusses schedules of expected cash collections and accounts receivable for Midwest Products as well as a production budget for Crystal Telecom.

    The schedule of expected cash collections from sales, by month and in total, for Midwest Products for the third quarter is provided in the passage.

    The accounts receivable balance as of September 30 for Midwest Products is $490,000 as calculated in the passage.

    Homework Topic 6

    EXERCISE 8–1 Schedule of Expected Cash Collections


    Midwest Products is a wholesale distributor of leaf rakes. Thus, peak sales occur in August of
    each year as shown in the company’s sales budget for the third quarter, given below:

    July August September Total


    Budgeted sales (all on $600,000 $900,000 $500,000 $2,000,000
    account)

    From past experience, the company has learned that 20% of a month’s sales are collected in
    the month of sale, another 70% are collected in the month following sale, and the remaining
    10% are collected in the second month following sale. Bad debts are negligible and can be
    ignored. May sales totaled $430,000, and June sales totaled $540,000.
    Required:
    1. Prepare a schedule of expected cash collections from sales, by month and in total,
    for the third quarter:

    July August September Total


    Amount
    $600,000 $900,000 $500,000 $2,000,000
    May Sales
    10% $43,000 $43,000
    June Sales
    70% $378,000 $378,000
    10% $54,000 $54,000
    July Sales
    20% 120,000.00 $120,000
    70% $420,000 $420,000
    10% $60,000 $60,000
    August Sales
    20% 180,000.00 $180,000
    70% $630,000 $630,000
    September Sales
    20% 100,000.00 $100,000
    Total $ 541,000 $ 654,000 $ 790,000 $ 1,985,000

    2. Assume that the company will prepare a budgeted balance sheet as of September
    30. Compute the accounts receivable as of that date.
    Homework Topic 6

    Months Sales Uncollected By Percentage Accounts Receivable


    July $600,000 0% 0
    August $900,000 10% $90,000
    September $500,000 80% $400,000
    Total $490,000

    EXERCISE 8–2 Production Budget


    Crystal Telecom has budgeted the sales of its innovative mobile phone over the next four
    months as follows:
    Months Sales in Units
    July 30,000
    August 45,000
    September 60,000
    October 50,000

    The company is now in the process of preparing a production budget for the third quarter.
    Past experience has shown that end-of-month finished goods inventories must equal 10% of
    the next month’s sales. The inventory at the end of June was 3,000 units.
    Required:
    Prepare a production budget for the third quarter showing the number of units to be
    produced each month and for the quarter in total.

    July August September Quarter


    Budget Sales 30,000 45,000 60,000 135,000
    End-Inventories 4,500 6,000 5,000 15,500
    Total Needs 34,500 51,000 65,000 150,500
    Beginning Inventories (3,000) (4,500) (6,000) 3,000
    Required Production 31,500 46,500 59,000 137,000
    Homework Topic 6

    EXERCISE 8–7 Cash Budget


    Forest Outfitters is a retailer that is preparing its budget for the upcoming fiscal year.
    Management has prepared the following summary of its budgeted cash flows:

    1st Quarter 2nd Quarter 3rd Quarter 4th Quarter


    Total cash receipts $340,000 $670,000 $410,000 $470,000
    Total cash disbursements $530,000 $450,000 $430,000 $480,000
    The company’s beginning cash balance for the upcoming fiscal year will be $50,000. The
    company requires a minimum cash balance of $30,000 and may borrow any amount needed
    from a local bank at a quarterly interest rate of 3%. The company may borrow any amount
    at the beginning of any quarter and may repay its loans, or any part of its loans, at the end
    of any quarter. Interest payments are due on any principal at the time it is repaid.
    Required:
    Prepare the company’s cash budget for the upcoming fiscal year.

    1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year


    Cash balance 50,000 30,000 74,900 54,900 50,000
    Total cash receipts 340,000 670,000 410,000 470,000 1,890,000
    Total cash available 390,000 700,000 484,900 524,900 2,099,800
    total cash disbursements 530,000 450,000 $430,000 $480,000 1,890,000
    Excess (deficiency) (140,000) 250,000 54,900 44,900 50,000
    Borrowings 170,000 0 0 0 170,000
    Repayment 0 (170,000) 0 0 (170,000)
    Interest 0 (5,100) 0 0 (5,100)
    Total financing 170,000 (175,100) 0 0 (5100)
    Ending Cash balance 30,000 74,900 54,900 44,900 44,900

    Khetam A. Alsulihim

    2201530

    JA1

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