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    Tenny Hajane's Avatar
    Tenny Hajane Posts: 1, Reputation: 1
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    #1

    Jun 5, 2007, 02:12 PM
    Managerial Accounting
    sales 20% for cash and 80% for credit. Company gross margin is 40% of sales.(in other words,cost of goods sold is 60% of sales. Monthly expenses are: salaries and wedges,$27,000 per month, advertising $70,000 per month,shipping 5% of sales. Other expenses 3% of sales. Depreciation will be $42,000 during the quarter. Each month ending inventory is 25% of the following month cost of goods sold. Inventory is paid for in the month of purchase, the other half is paid in the following month. During February the company will purchase machine for $1,700 cash, March will purchase equipment for $84,500. During January the company will pay $45,000 in cash dividends. Company must maintain minimum cash balance of $30,000. Credit is available at a bank for borrowing that may be needed during the quarter. All borrowing is done at the begginning of the month and all repayments made at the end of the month. Borrowings and repayments of principal must be in $1,000. Interest is paid only at the payments of principal. The annual interest rate is 12%.(figure interest on whole months,e.g,1/12, 2/12.
    As of December 31st the company account balances:

    Debits Credits
    Cash $48,000
    Accounts receivable $224,000
    Inventory 60,000
    Building&equipment 370,000
    Accounts payable $93,000
    Capital stock 500,000
    Retained earnings 109,000
    $702,000 $702,000

    Actual sales for December and budgeted sales for 4 months:
    December actual $280,000
    January $400,000
    February $600,000
    March $300,000
    April $200,000


    QUESTIONS ASKED BASED ON THE ABOVE DATA:

    COMPLETE THE FOLLOWING STATEMENTS AND SCHEDULES FOR THE 1ST QUARTER:


    Jan Feb Mar Quarter
    1.
    Cash sales $80,000
    Credit sales 224,000
    Total cash collections $304,000

    2a. Merchandise purchases budget:

    Jan Feb Mar Quarter

    Budgeted cost of goods sold $240,000 $360,000
    Add desired ending inventory 90,000
    Total needs 330,000
    Less beginning inventory 60,000
    Required purchases $270,000
    $400,000 sales *60% cost ratio=$240,000.
    $360,000*25%=$90,000

    2b. SCHEDULE OF EXPECTED CASH DISBURSEMENT FOR SELLING AND ADMIN EXPENSES:

    Jan Feb Mar Quarter

    December purchases $93,000 $93,000
    January purchases $135,000 $135,000 270,000

    Feb purchases
    March purchases
    Total cash disbursement
    forpurchases $228,000
    Curlyben's Avatar
    Curlyben Posts: 18,514, Reputation: 1860
    BossMan
     
    #2

    Jun 5, 2007, 02:13 PM
    Please refer to THIS ANNOUNCEMENT

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