+1-415-670-9189
info@expertsmind.com
Prepare a cash budget for carmel covering
Course:- Cost Accounting
Reference No.:- EM13298401




Assignment Help
Assignment Help >> Cost Accounting

The Carmel Corporation's projected sales for the firsteight months of 2004 are as follows:

January $100,000

February 110,000
March 130,000
April 250,000
May $275,000
June 250,000
July 235,000
August 160,000

Of Carmel's sales, 20 percent is for cash, another 60percent is collected in the month following sale, and 20 percent iscollected in the second month following sale. November and Decembersales for 2003 were $220,000 and $175,000, respectively.

Carmel purchases its raw materials two months in advance of itssales equal to 70 percent of their final sales price. The supplieris paid one month after it makes delivery. For example, purchasesfor April sales are made in February and payment is made inMarch.

In addition, Carmel pays $10,000 per month for rent and $20,000each month for other expenditures. Tax prepayments for $23,000 aremade each quarter beginning in March.

The company's cash balance at December 31, 2003, was$22,000; a minimum balance of $20,000 must be maintained at alltimes. Assume that any short-term financing needed to maintain cashbalance would be paid off in the month following the month offinancing if sufficient funds are available. Interest on short-termloans (12 percent) is paid monthly. Borrowing to meet estimatedmonthly cash needs takes place at the beginning of the month. Thus,if in the month of April the firm expects to have a need foran additional $60,500, these funds would be borrowed at thebeginning of April with interest of $605 (.12 × 1/12 ×$60,500) owed for April and paid at the beginning of May.

a) Prepare a cash budget for Carmel covering the first seven months of 2004.

b) Carmel has $250,000 in notes payable due in July that must berepaid or renegotiated for an extension. Will the firm have ample cash to repay the notes?




Put your comment
 
Minimize


Ask Question & Get Answers from Experts
Browse some more (Cost Accounting) Materials
Assume that you are a consultant to Broske Inc., and you have been provided with the following data: D1 = $1.90; P0 = $45.50; and g = 7.00% (constant). What is the cost of e
Prepare the journal entries to record the closing-out of the balance in manufacturing overhead to the appropriate accounts, and show any necessary calculations in the notes
Prepare a Schedule of Cost of Goods Manufactured and Cost of Goods Sold. (The schedules may be in the appendix). Explain why some cost items have been excluded from the sche
Does the company appear solvent and Why or why not? Can Boeing pay off its current liabilities with liquid assets? Would it be more or less solvent if the dollar amounts in
Prepare a list of the costs that should be assigned to Job 123. Provide an explanation of your treatment of each item and discuss briefly how information concerning the cost
How would you measure the relative profitability of the company's products in the situation? Assume that it is not feasible to change the way salespersons are compensated.
Refer to information from QS 22-10. Grace pays a sales manager a monthly salary of $ 6,000 and a commission of 8% of camera sales (in dollars). Prepare a selling expense budge
Determining appropriate product costs is essential to reporting a reliable inventory valuation. Fraud examiners have indicated that scams that involve product costs and expe