Chapter 22 Homework Problems
Chapter 22 Homework Problems
QS
22-21 and QS 22-26
1. Wells
Company reports the following sales forecast: September, $55,000; October,
$66,000; and November, $80,000. All sales are on account. Collections of credit
sales are received as follows: 25% in the month of sale, 60% in the first month
after sale, and 10% in the second month after sale. 5% of all credit sales are
written off as uncollectible. Prepare a schedule of cash receipts for November.
WELLS COMPANY
|
|
Budgeted Cash Receipts
|
|
For Month Ended November 30
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|
Cash receipts from November cash
sales
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$20,000
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Collection of October’s sales
|
39,600
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Collection of September’s sales
|
5,500
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Total budgeted cash receipts
|
$65,100
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Book pages: 539 (Financing Budgets)
2.
Garda
purchased $600,000 of merchandise in August and expects to purchase $720,000 in
September. Merchandise purchases are paid as follows: 25% in the month of
purchase and 75% in the following month.
Compute cash payments for merchandise for September.
Compute cash payments for merchandise for September.
GARDA
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Cash Payments for Merchandise
(Budgeted)
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|
For Month Ended September 30
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|
Cash Payments for September
purchases
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$180,000
|
Cash Payments for August purchases
|
450,000
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Total budgeted cash payments
|
$630,000
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Book pages: 545 (Appendix 22A:
Merchandise Purchases Budget)
Exercise
22-25
1.
Use the following information to prepare the July cash
budget for Acco Co. It should show expected cash receipts and cash payments for
the month and the cash balance expected on July 31.
a. Beginning cash balance on July
1: $50,000.
b. Cash receipts from sales: 30% is collected in the month of sale, 50%
in the next month, and 20% in the second month after sale (uncollectible
accounts are negligible and can be ignored). Sales amounts are: May (actual),
$1,720,000; June (actual), $1,200,000; and July (budgeted), $1,400,000.
c. Payments on merchandise purchases: 60% in the month of purchase and
40% in the month following purchase. Purchases amounts are: June (actual),
$700,000; and July (budgeted), $750,000.
d. Budgeted cash payments for salaries in July: $275,000.
e. Budgeted depreciation expense for July: $36,000.
f. Other cash expenses budgeted for July: $200,000.
g. Accrued income taxes due in July: $80,000.
h. Bank loan interest paid in July: $6,600.
Calculation:
Calculate the budgeted cash receipts and cash
payments.
|
Calculation of Cash
Receipts from Sales
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|||||
----------------Collected in-----------------
|
July 31
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||||
Total Sales
|
May
|
June
|
July
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Accounts Rec.
|
|
Credit sales from:
|
|||||
May
|
$1,720,000
|
$516,000
|
$860,000
|
$344,000
|
$0
|
June
|
1,200,000
|
0
|
360,000
|
600,000
|
240,000
|
July
|
1,400,000
|
0
|
0
|
420,000
|
980,000
|
Totals
|
$4,320,000
|
$516,000
|
$1,220,000
|
$1,364,000
|
$ 1,220,000
|
Calculation of Cash Payments
for Merchandise
|
|||||
--------------------Paid in---------------------
|
July 31
|
||||
Total Purchases
|
June
|
July
|
Accounts Pay.
|
||
Purchases from:
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|||||
June
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$700,000
|
$420,000
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$280,000
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$0
|
|
July
|
750,000
|
0
|
450,000
|
300,000
|
|
Totals
|
$1,450,000
|
$420,000
|
$730,000
|
$300,000
|
|
Cash Budget:
Prepare the July cash budget for Acco. Co.
|
ACCO CO.
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||
Cash Budget
|
||
For the Month Ended
July 31
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||
Beginning cash balance
|
$ 50,000
|
|
Cash receipts from sales
|
1,364,000
|
|
Total cash available
|
$ 1,414,000
|
|
Cash payments for:
|
||
Merchandise
|
730,000
|
|
Salaries
|
275,000
|
|
Other expenses
|
200,000
|
|
Accrued taxes
|
80,000
|
|
Interest on bank loan
|
6,600
|
|
Total cash payments
|
1,291,600
|
|
Ending cash balance
|
$ 122,400
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|
Explanation:
Note: Depreciation expense is excluded since it is a
non-cash expense
Cash receipts in July from sales:
From May sales ($1,720,000 × 20%)
|
$
|
344,000
|
|
From June sales ($1,200,000 × 50%)
|
600,000
|
||
From July sales ($1,400,000 × 30%)
|
420,000
|
||
Total
|
$
|
1,364,000
|
|
Cash payments in July for merchandise:
For June purchases ($700,000 × 40%)
|
$
|
280,000
|
|
For July purchases ($750,000 × 60%)
|
450,000
|
||
Total
|
$
|
730,000
|
Book pages: 545 (Appendix 22A Merchandise Purchases Budget)
Exercise 22-26
1. Following information relates to Acco Co.
a.
Beginning cash balance on July 1:
$50,000.
b.
Cash receipts from sales: 30% is
collected in the month of sale, 50% in the next month, and 20% in the second
month after sale (uncollectible accounts are negligible and can be ignored).
Sales amounts are: May (actual), $1,720,000; June (actual), $1,200,000; and
July (budgeted), $1,400,000.
c.
Payments on merchandise purchases: 60%
in the month of purchase and 40% in the month following purchase. Purchases
amounts are: June (actual), $700,000; and July (budgeted), $750,000.
d.
Budgeted cash payments for salaries in
July: $275,000.
e.
Budgeted depreciation expense for
July: $36,000.
f.
Other cash expenses budgeted for July:
$200,000.
g.
Accrued income taxes due in July:
$80,000.
h.
Bank loan interest paid in July:
$6,600.
Additional Information:
a.
Cost of goods sold is 55% of sales.
b.
Inventory at the end of June is
$80,000 and at the end of July is $60,000.
c.
Salaries payable on June 30 are
$50,000 and are expected to be $60,000 on July 31.
d.
The equipment account balance is
$1,600,000 on July 31. On June 30, the accumulated depreciation on equipment is
$280,000.
e.
The $6,600 cash payment of interest
represents the 1% monthly expense on a bank loan of $660,000.
f.
Income taxes payable on July 31 are
$30,720, and the income tax rate is 30%.
g.
The only other balance sheet accounts
are: Common Stock, with a balance of $600,000 on June 30; and Retained
Earnings, with a balance of $964,000 on June 30.
Prepare a budgeted income statement for the month of
July and a budgeted balance sheet for July 31.
Calculation:
Calculate the budgeted cash receipts and cash payments.
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Inc
Stmt Bal Sheet:
Prepare a budgeted income statement for the month of July and a
budgeted balance sheet for July 31.
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Explanation:
Budgeted Income Statement supporting calculations:
Cost of goods sold
Sales
|
$
|
1,400,000
|
|
Cost percent
|
55
|
%
|
|
Cost of goods sold
|
$
|
770,000
|
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Salaries expense
Cash paid
|
$
|
275,000
|
|
Less beginning payable
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(50,000
|
)
|
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Plus ending payable
|
60,000
|
||
Salaries expense
|
$
|
285,000
|
|
Income tax expense
Pre-tax income
|
$
|
102,400
|
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Tax rate
|
30
|
%
|
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Income tax expense
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$
|
30,720
|
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Budgeted
Balance Sheet supporting calculations:
Cash receipts in July from sales
Cash receipts in July from sales
From May sales ($1,720,000 × 20%)
|
$
|
344,000
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From June sales ($1,200,000 × 50%)
|
600,000
|
||
From July sales ($1,400,000 × 30%)
|
420,000
|
||
Total
|
$
|
1,364,000
|
|
Cash payments in July for merchandise
For June purchases ($700,000 × 40%)
|
$
|
280,000
|
|
For July purchases ($750,000 × 60%)
|
450,000
|
||
Total
|
$
|
730,000
|
|
Accounts
receivable
June sales (20% × $1,200,000)
|
$
|
240,000
|
|
July sales (70% × $1,400,000)
|
980,000
|
||
Total
|
$
|
1,220,000
|
|
Accumulated depreciation
Beginning
|
$
|
280,000
|
|
Expense
|
36,000
|
||
Ending
|
$
|
316,000
|
|
Accounts payable
Purchases
|
$
|
750,000
|
|
Percent unpaid
|
40
|
%
|
|
Payable
|
$
|
300,000
|
|
Retained earnings
Beginning
|
$
|
964,000
|
|
Net income
|
71,680
|
||
Ending
|
$
|
1,035,680
|
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