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MaryandKay,Inc.,adistributorofcosmeticsthroughoutFlorida,isintheprocessofassemblingacash
budgetforthefirstquarterof201.Thefollowinginformationhasbeenextractedfromthecompany's
accountingrecords:
Allsalesareonaccount.Sixtypercentofcustomeraccountsarecollectedinthemonthofsale35
percentarecollectedinthefollowingmonth.Uncollectiblesamountingto5percentofsalesare
anticipated,andmanagementbelievesthatonly20percentoftheaccountsoutstandingonDecember31,
20x0,willberecoveredandthattherecoverywillbeinJanuary201.
Seventypercentofthemerchandisepurchasesarepaidforinthemonthofpurchasetheremaining30
percentarepaidforinthemonthafteracquisition.
TheDecember31,20x0,balancesheetdisclosedthefollowingselectedfigures:cash,$20,000accounts
receivable,$55,000andaccountspayable,$22,000.
MaryandKay,Inc.maintainsa$20,000minimumcashbalanceatalltimes.Financingisavailable(and
retired)in$1,000multiplesatan8percentinterestrate,withborrowingstakingplaceatthebeginningof
themonthandrepaymentsoccurringattheendofthemonth.Interestispaidatthetimeofrepaying
principalandcomputedontheportionofprincipalrepaidatthattime.
Additionaldata:
January February March
Salesrevenue $150,000 $180,000 $185,000
Merchandisepurchases 90,000 100,000 140,000
Cashoperatingcosts 31,000 24,000 45,000
Proceedsfromsaleofequipment 5,000
Required:
1. Prepareaschedulethatdisclosesthefirm'stotalcashcollectionsforJanuarythroughMarch.(Leaveno
cellsblankbecertaintoenter"0"whereverrequired.Omitthe"$"signinyourresponse.)
January February March
Collectionofaccountsreceivable: $11,000 $0 $0
CollectionofJanuarysales 90,000 52,500 0
CollectionofFebruarysales 0 108,000 63,000
CollectionofMarchsales 0 0 111,000
Saleofequipment 0 0 5,000
Totalcashcollections $101,000 $160,500 $179,000
2. Prepareaschedulethatdisclosesthefirm'stotalcashdisbursementsforJanuarythroughMarch.
(Leavenocellsblankbecertaintoenter"0"whereverrequired.Omitthe"$"signinyour
response.)
January February March
Paymentofaccountspayable $22,000 $0 $0
PaymentofJanuarypurchases 63,000 27,000 0
PaymentofFebruarypurchases 0 70,000 30,000
PaymentofMarchpurchases 0 0 98,000
Cashoperatingcosts 31,000 24,000 45,000
Totalcashdisbursements $116,000 $121,000 $173,000
3. Prepareaschedulethatdisclosesthefirm'scashneeds,ifany,forJanuarythroughMarch.The
scheduleshouldpresentthefollowinginformationintheordercited:Beginningcashbalance,total
receipts(fromrequirement(1)),totalpayments(fromrequirement(2)),thecashexcess(deficiency)
beforefinancing,borrowingneededtomaintainminimumbalance,loanprincipalrepaid,loaninterest
paid,andendingcashbalance.(Leavenocellsblankbecertaintoenter"0"whereverrequired.
Amountstobedeductedshouldbeindicatedbyaminussign.Omitthe"$"signinyour
response.)
References
MaryandKay,Inc.,adistributorofcosmeticsthroughoutFlorida,isintheprocessofassemblingacash
budgetforthefirstquarterof201.Thefollowinginformationhasbeenextractedfromthecompany's
accountingrecords:
Allsalesareonaccount.Sixtypercentofcustomeraccountsarecollectedinthemonthofsale35
percentarecollectedinthefollowingmonth.Uncollectiblesamountingto5percentofsalesare
anticipated,andmanagementbelievesthatonly20percentoftheaccountsoutstandingonDecember31,
20x0,willberecoveredandthattherecoverywillbeinJanuary201.
Seventypercentofthemerchandisepurchasesarepaidforinthemonthofpurchasetheremaining30
percentarepaidforinthemonthafteracquisition.
TheDecember31,20x0,balancesheetdisclosedthefollowingselectedfigures:cash,$20,000accounts
receivable,$55,000andaccountspayable,$22,000.
MaryandKay,Inc.maintainsa$20,000minimumcashbalanceatalltimes.Financingisavailable(and
retired)in$1,000multiplesatan8percentinterestrate,withborrowingstakingplaceatthebeginningof
themonthandrepaymentsoccurringattheendofthemonth.Interestispaidatthetimeofrepaying
principalandcomputedontheportionofprincipalrepaidatthattime.
Additionaldata:
Required:
1. Prepareaschedulethatdisclosesthefirm'stotalcashcollectionsforJanuarythroughMarch.(Leaveno
cellsblankbecertaintoenter"0"whereverrequired.Omitthe"$"signinyourresponse.)
2. Prepareaschedulethatdisclosesthefirm'stotalcashdisbursementsforJanuarythroughMarch.
(Leavenocellsblankbecertaintoenter"0"whereverrequired.Omitthe"$"signinyour
response.)
3. Prepareaschedulethatdisclosesthefirm'scashneeds,ifany,forJanuarythroughMarch.The
scheduleshouldpresentthefollowinginformationintheordercited:Beginningcashbalance,total
receipts(fromrequirement(1)),totalpayments(fromrequirement(2)),thecashexcess(deficiency)
beforefinancing,borrowingneededtomaintainminimumbalance,loanprincipalrepaid,loaninterest
paid,andendingcashbalance.(Leavenocellsblankbecertaintoenter"0"whereverrequired.
Amountstobedeductedshouldbeindicatedbyaminussign.Omitthe"$"signinyour
response.)
Explanation:
1.
Scheduleofcashcollections:
Collectionofaccountsreceivable:$55,00020%
CollectionofJanuarysales($150,000):60%inJanuary35%inFebruary
CollectionofFebruarysales($180,000):60%inFebruary35%inMarch
CollectionofMarchsales($185,000):60%inMarch35%inApril
2.
Scheduleofcashdisbursements:
PaymentofJanuarypurchases($90,000):70%inJanuary30%inFebruary
PaymentofFebruarypurchases($100,000):70%inFebruary30%inMarch
PaymentofMarchpurchases($140,000):70%inMarch30%inApril
3.
LoaninterestpaidinFebruary:
$15,0008%2/12
2. Award: 5 out of 5.00 points
Badlands,Inc.manufacturesahouseholdfanthatsellsfor$40perunit.Allsalesareonaccount,with40
percentofsalescollectedinthemonthofsaleand60percentcollectedinthefollowingmonth.Thedata
thatfollowwereextractedfromthecompany'saccountingrecords.
Badlandsmaintainsaminimumcashbalanceof$30,000.TotalpaymentsinJanuary201arebudgeted
at$390,000.
AscheduleofcashcollectionsforJanuaryandFebruaryof201revealedthefollowingreceiptsforthe
period:
CashReceipts
January February
FromDecember31accountsreceivable $216,000
FromJanuarysales 152,000 $228,000
FromFebruarysales 156,800
March201salesareexpectedtototal10,000units.
Finishedgoodsinventoriesaremaintainedat20percentofthefollowingmonth'ssales.
TheDecember31,200,balancesheetrevealedthefollowingselectedfigures:cash,$45,000accounts
receivable,$216,000andfinishedgoods,$44,700.
Required:
1. DeterminethenumberofunitsthatBadlandssoldinDecember200.
Decembersales 9,000 units
2. ComputethesalesrevenueforMarch201.(Omitthe"$"signinyourresponse.)
Salesrevenue $400,000
3. ComputethetotalsalesrevenuetobereportedonBadlandsbudgetedincomestatementforthefirst
quarterof201.(Omitthe"$"signinyourresponse.)
Totalsalesrevenue $1,172,000
4. DeterminetheaccountsreceivablebalancetobereportedontheMarch31,201,budgetedbalance
sheet.(Omitthe"$"signinyourresponse.)
Accountsreceivablebalance $240,000
5. CalculatethenumberofunitsintheDecember31,200,finishedgoodsinventory.
Finishedgoodsinventory 1,900 units
6. CalculatethenumberofunitsoffinishedgoodstobemanufacturedinJanuary201.
Finishedgoodstobemanufactured 9,560 units
7. CalculatethefinancingrequiredinJanuary,ifany,tomaintainthefirm'sminimumcashbalance.(Omit
the"$"signinyourresponse.)
Financingrequired $7,000
References
Badlands,Inc.manufacturesahouseholdfanthatsellsfor$40perunit.Allsalesareonaccount,with40
percentofsalescollectedinthemonthofsaleand60percentcollectedinthefollowingmonth.Thedata
thatfollowwereextractedfromthecompany'saccountingrecords.
Badlandsmaintainsaminimumcashbalanceof$30,000.TotalpaymentsinJanuary201arebudgeted
at$390,000.
AscheduleofcashcollectionsforJanuaryandFebruaryof201revealedthefollowingreceiptsforthe
period:
CashReceipts
January February
FromDecember31accountsreceivable $216,000
FromJanuarysales 152,000 $228,000
FromFebruarysales 156,800
March201salesareexpectedtototal10,000units.
Finishedgoodsinventoriesaremaintainedat20percentofthefollowingmonth'ssales.
TheDecember31,200,balancesheetrevealedthefollowingselectedfigures:cash,$45,000accounts
receivable,$216,000andfinishedgoods,$44,700.
Required:
1. DeterminethenumberofunitsthatBadlandssoldinDecember200.
2. ComputethesalesrevenueforMarch201.(Omitthe"$"signinyourresponse.)
Salesrevenue $ 400,000
3. ComputethetotalsalesrevenuetobereportedonBadlandsbudgetedincomestatementforthefirst
quarterof201.(Omitthe"$"signinyourresponse.)
Totalsalesrevenue $ 1,172,000
4. DeterminetheaccountsreceivablebalancetobereportedontheMarch31,201,budgetedbalance
sheet.(Omitthe"$"signinyourresponse.)
Accountsreceivablebalance $ 240,000
5. CalculatethenumberofunitsintheDecember31,200,finishedgoodsinventory.
6. CalculatethenumberofunitsoffinishedgoodstobemanufacturedinJanuary201.
7. CalculatethefinancingrequiredinJanuary,ifany,tomaintainthefirm'sminimumcashbalance.(Omit
the"$"signinyourresponse.)
Financingrequired $ 7,000
Explanation:
1.
Salesarecollectedoveratwomonthperiod,40%inthemonthofsaleand60%inthefollowing
month.Decemberreceivablesof$216,000equal60%ofDecember'ssalesthus,Decembersalestotal
$360,000($216,000.6).Sincethesellingpriceis$40perunit,Badlandssold9,000units($360,000
$40).
2.
Sincethecompanyexpectstosell10,000units,salesrevenuewilltotal$400,000(10,000units$40).
3.
Badlandscollected40%ofFebruary'ssalesinFebruary,or$156,800.Thus,February'ssalestotal
$392,000($156,800.4).CombiningJanuarysales($152,000+$228,000),Februarysales($392,000),
andMarchsales($400,000),thecompanywillreportrevenueof$1,172,000.
4.
SixtypercentofMarch'ssaleswillbeoutstanding,or$240,000($400,00060%).
5.
Finishedgoodsinventoriesaremaintainedat20%ofthefollowingmonth'ssales.Januarysalestotal
$380,000($152,000+$228,000),or9,500units($380,000$40).Thus,theDecember31inventoryis
1,900units(9,50020%).
6.
Februarysaleswilltotal9,800units($392,000$40),givingrisetoaJanuary31inventoryof1,960units
(9,80020%).LettingXdenoteproduction,then:
12/31/0inventory+XJanuary201sales=1/31/1inventory
1,900+X9,500=1,960
X7,600=1,960
X=9,560
7.
Financingrequiredis$7,000($30,000minimumbalance$23,000endingbalance):
Cashbalance,January1 $ 45,000
Add:Januaryreceipts($216,000+$152,000) 368,000
Subtotal $413,000
Less:Januarypayments 390,000
Cashbalancebeforefinancing $ 23,000