C9 selfstudy
1 like1,206 views
This document provides financial information for Nordic Company over a 3 month quarter including: 1) Expected cash collections from sales totaling $221,000 for the quarter. 2) Inventory purchases budget totaling $143,400 for the quarter to meet a projected cost of goods sold of $147,000 plus ending inventory of $9,000. 3) A cash budget showing projected cash balances, collections, purchases, expenses and financing activities resulting in an ending cash balance of $8,400 for the quarter.
C9 selfstudy
- 1. Problem 9-14 (45 minutes) 1. Schedule of expected cash collections: Month April May June Quarter From accounts receivable ..................... $141,000 $ 7,200 $148,200 From April sales: 20% _ 200,000.............. 40,000 40,000 75% _ 200,000.............. 150,000 150,000 4% _ 200,000 ............... $ 8,000 8,000 From May sales: 20% _ 300,000.............. 60,000 60,000 75% _ 300,000.............. 225,000 225,000 From June sales: 20% _ 250,000.............. 50,000 50,000 Total cash collections ........ $181,000 $217,200 $283,000 $681,200
- 2. Problem 9-14 (continued) 2. Cash budget: Month April May June Quarter Cash balance, beginning.................... $ 26,000 $ 27,000 $ 20,200 $ 26,000 Add receipts: Collections from customers ................ 181,000 217,200 283,000 681,200 Total available ................ 207,000 244,200 303,200 707,200 Less disbursements: Merchandise purchases................. 108,000 120,000 180,000 408,000 Payroll ........................ 9,000 9,000 8,000 26,000 Lease payments........... 15,000 15,000 15,000 45,000 Advertising.................. 70,000 80,000 60,000 210,000 Equipment purchases ... 8,000 — — 8,000 Total disbursements........ 210,000 224,000 263,000 697,000 Excess (deficiency) of receipts over disbursements ............. (3,000) 20,200 40,200 10,200 Financing: Borrowings.................. 30,000 — — 30,000 Repayments ................ — — (30,000) (30,000) Interest ...................... — — (1,200) (1,200) Total financing ............... 30,000 — (31,200) (1,200) Cash balance, ending $ 27,000 $ 20,200 $ 9,000 $ 9,000 3. If the company needs a minimum cash balance of $20,000 to start each month, the loan cannot be repaid in full by June 30. If the loan is repaid in full, the cash balance will drop to only $9,000 on June 30, as shown above. Some portion of the loan balance will have to be carried over to July, at which time the cash inflow should be sufficient to complete repayment.
- 3. Problem 9-16 (60 minutes) 1. The sales budget for the third quarter: July Aug. Sept. Quarter Budgeted sales (pairs) ...... 6,000 7,000 5,000 18,000 Selling price per pair ......... _ $50 _ $50 _ $50 _ $50 Total budgeted sales......... $300,000 $350,000 $250,000 $900,000 The schedule of expected cash collections from sales: July Aug. Sept. Quarter Accounts receivable, beginning balance.......... $130,000 $130,000 July sales: $300,000 _ 40%, 50% ... 120,000 $150,000 270,000 August sales: $350,000 _ 40%, 50% ... 140,000 $175,000 315,000 September sales: $250,000 _ 40%............ 100,000 100,000 Total cash collections ........ $250,000 $290,000 $275,000 $815,000 2. The production budget for July through October: July Aug. Sept. Oct. Budgeted sales (pairs) ....................... 6,000 7,000 5,000 4,000 Add desired ending inventory ............. 700 500 400 300 Total needs....................................... 6,700 7,500 5,400 4,300 Less beginning inventory.................... 600 700 500 400 Required production (pairs) ................ 6,100 6,800 4,900 3,900
- 4. Problem 9-16 (continued) 3. The materials purchases budget for the third quarter: July Aug. Sept. Quarter Required production—pairs (above)............................. 6,100 6,800 4,900 17,800 Raw materials needs per pair .................................. _ 2kgs. _ 2kgs. _ 2kgs. _ 2kgs. Production needs (kgs.) ........ 12,200 13,600 9,800 35,600 Add desired ending inventory .......................... 2,720 1,960 1,560 * 1,560 Total needs.......................... 14,920 15,560 11,360 37,160 Less beginning inventory....... 2,440 2,720 1,960 2,440 Raw materials to be purchased ......................... 12,480 12,840 9,400 34,720 Cost of raw materials to be purchased at $2.50 per kg. ................................... $31,200 $32,100 $23,500 $86,800 *3,900 pairs (October) _ 2 kgs. per pair= 7,800 kgs.; 7,800 kgs. _ 20% = 1,560 kgs. The schedule of expected cash disbursements: July Aug. Sept. Quarter Accounts payable, beginning balance................................... $11,400 $11,400 July purchases: $31,200 _ 60%, 40% ............... 18,720 $12,480 31,200 August purchases: $32,100 _ 60%, 40% ............... 19,260 $12,840 32,100 September purchases: $23,500 _ 60%........................ 14,100 14,100 Total cash disbursements ............ $30,120 $31,740 $26,940 $88,800
- 5. Problem 9-19 (120 minutes) 1. Schedule of expected cash collections: April May June Total Cash sales ............................... $14,000 $17,000 $18,000 $ 49,000 Credit sales.............................. 48,000 56,000 68,000 172,000 Total collections........................ $62,000 $73,000 $86,000 $221,000 2. a. Inventory purchases budget: April May June Total Budgeted cost of goods sold...... $42,000 $51,000 $54,000 $147,000 Add desired ending inventory* .. 15,300 16,200 9,000 9,000 Total needs.............................. 57,300 67,200 63,000 156,000 Less beginning inventory........... 12,600 15,300 16,200 12,600 Required purchases .................. $44,700 $51,900 $46,800 $143,400 * At April 30: $51,000 _ 30% = $15,300. At June 30: $50,000 July sales _ 60% _ 30% = $9,000. b. Schedule of cash disbursements for purchases: April May June Total For March purchases ................ $18,300 $18,300 For April purchases................... 22,350 $22,350 44,700 For May purchases ................... 25,950 $25,950 51,900 For June purchases .................. 23,400 23,400 Total cash disbursements .......... $40,650 $48,300 $49,350 $138,300
- 6. Problem 9-19 (continued) 3. Schedule of cash disbursements for operating expenses: April May June Total Salaries and wages....................... $ 7,500 $ 7,500 $ 7,500 $22,500 Shipping...................................... 4,200 5,100 5,400 14,700 Advertising .................................. 6,000 6,000 6,000 18,000 Other expenses............................2,800 3,400 3,600 9,800 Total cash disbursements for operating expenses.................... $20,500 $22,000 $22,500 $65,000 4. Cash budget: April May June Total Cash balance, beginning ............... $ 9,000 $ 8,350 $ 8,050 $ 9,000 Add cash collections ..................... 62,000 73,000 86,000 221,000 Total cash available.................... 71,000 81,350 94,050 230,000 Less disbursements: For inventory purchases ............. 40,650 48,300 49,350 138,300 For operating expenses .............. 20,500 22,000 22,500 65,000 For equipment purchases ........... 11,500 3,000 0 14,500 For dividends ............................ 0 0 3,500 3,500 Total disbursements...................... 72,650 73,300 75,350 221,300 Excess (deficiency) of cash............ (1,650) 8,050 18,700 8,700 Financing: Borrowings ............................... 10,000 0 0 10,000 Repayments .............................. 0 0 (10,000) (10,000) Interest* .................................. 0 0 (300) (300) Total financing ............................. 10,000 0 (10,300) (300) Cash balance, ending.................... $ 8,350 $ 8,050 $ 8,400 $ 8,400 * $10,000 _ 12% _ 3/12 = $300.
- 7. Problem 9-19 (continued) 5. Income Statement: NORDIC COMPANY Income Statement For the Quarter Ended June 30 Sales........................................................ $245,000 Less cost of goods sold: Beginning inventory (given) ..................... $ 12,600 Add purchases (Part 2) ............................ 143,400 Goods available for sale ........................... 156,000 Ending inventory (Part 2)......................... 9,000 147,000 Gross margin ............................................ 98,000 Less operating expenses: Salaries and wages (Part 3) ..................... 22,500 Shipping (Part 3) .................................... 14,700 Advertising (Part 3) ................................. 18,000 Depreciation........................................... 6,000 Other expenses (Part 3) .......................... 9,800 71,000 Net operating income ................................ 27,000 Less interest expense (Part 4)..................... 300 Net income ............................................... $ 26,700
- 8. Problem 9-19 (continued) 6. Balance sheet: NORDIC COMPANY Balance Sheet June 30 Assets Current assets: Cash (Part 4)................................................................. $ 8,400 Accounts receivable (80% _ $90,000) .............................. 72,000 Inventory (Part 2) .......................................................... 9,000 Total current assets .......................................................... 89,400 Buildings and equipment, net ($214,100 + $14,500 – $6,000) ...................................... 222,600 Total assets ..................................................................... $312,000 Liabilities and Equity Current liabilities: Accounts payable (Part 2: 50% _ $46,800)...... $ 23,400 Shareholders’ equity: Capital stock................................................. $190,000 Retained earnings* ....................................... 98,600 288,600 Total liabilities and equity ................................. $312,000 * Retained earnings, beginning..................... $ 75,400 Add net income........................................ 26,700 Total ....................................................... 102,100 Less dividends ......................................... 3,500 Retained earnings, ending ......................... $ 98,600