budgeted, Cost Accounting

Question:

Yamba Home Products is just beginning its fourth quarter, in which peak sales occur. The company has requested a $12,000, 90-day loan from its bank to help meet cash requirements during the quarter. The loan officer has asked for a cash budget for the quarter to help determine whether the loan should be made.

The following data are available for the quarter:

1. On April 1, the start of the quarter, the company had a cash balance of $6,000. Accounts receivable on April 1 totalled $31,500, of which $29,500 will be collected during April and $1,600 will be collected during May. The remainder will be uncollectable.

2. Past experience shows that 25 percent of a month''s sales are collected in the month of sale, 70 percent in the month following sale, and 4 percent in the second month following sale. Budgeted sales and expenses for the fourth quarter follow:







April


May


June




Sales


$ 50,000


$60,000


$45,000




Merchandise purchase


36,000


27,000


24,000




Payroll


6,500


6,750


6,000




Rent payment


4,500


4,500


4,500




Other Cash payments


8,500


9,100


7,500




Depreciation


2,500


2,500


2,500


3. Merchandise purchases are paid in full during the month following purchase. Accounts payable for merchandise purchases on March 31, which will be paid during April, totalled $30,000.

4. In preparing a cash budget, assume that the loan is made in April and repaid in June. Interest on the loan will total $450.

Required:

a. Prepare a schedule of budgeted cash collections for April, May and June and for the quarter in total.

b. Prepare a cash budget, by month and in total, for the quarter.

c. If the company needs a minimum cash balance of $5,000 to start each month, can the loan be repaid as planned? Explain.
Posted Date: 8/20/2013 3:24:58 AM | Location : Australia







Related Discussions:- budgeted, Assignment Help, Ask Question on budgeted, Get Answer, Expert's Help, budgeted Discussions

Write discussion on budgeted
Your posts are moderated
Related Questions
A company provides several different services to its customers from a single office. Fixed costs of the office, including staff costs, are absorbed into the company's service costs

Vintage Auto Company manufactures parts to order for antique cars. Vintage Auto makes everything from fenders to engine blocks. Each customer order is treated as a job. Vintage Aut

In this section we have tried to develop the concept of flow of funds inside the organization. Starting along with the funds requirement for an organization, we have tried to trace

can you guys do a project which is due in 2 weeks

Draw the relevant diagrams for a typical farm, and for the market as a whole, when the market for wheat is in long run equilibrium. Assume the farm faces perfect completion. (hint,

High - Low Method of Cost Estimation Now, cost estimation is based upon the relationship between past level and past cost of activity. Variable cost is based on the relationsh

Cost Behaviour "Profitability is only around the corner." This is a general expression in the business world; you might have heard or said this yourself only. But, the reality

Principles of Marginal Costing The principles of marginal costing are as given: 1. Period fixed costs are similar, for any volume of sales and production provided suc


Each unit of a product requires four components. The average number of components is 4.25 due to component failure. Purchasing higher quality components can reduce the average numb