Concept explainers
Assume the following: Animal Gear (AG) does not make any sales on credit. AG sells only to the public and accepts cash and credit cards; 90% of its sales are to customers using credit cards, for which AG gets the cash right away, less a 2% transaction fee.
Purchases of materials are on account. AG pays for half the purchases in the period of the purchase and the other half in the following period. At the end of March, AG owes suppliers $8,000.
AG plans to replace a machine in April at a net cash cost of $13,000.
Labor, other
AG currently has a $2,000 loan at an annual interest rate of 12%. The interest is paid at the end of each month. If AG has more than $7,000 cash at the end of April it will pay back the loan. AG owes $5,000 in income taxes that need to be remitted in April. AG has cash of $5,900 on hand at the end of March.
- 1. Prepare a cash budget for April for Animal Gear.
- 2. Why do Animal Gear’s managers prepare a cash budget in addition to the revenue, expenses, and operating income budget?
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Chapter 6 Solutions
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
- A cash budget, by quarters, is given below for a retail company (000 omitted). The company requires a minimum cash balance of at least $3,000 to start each quarter. Required: Fill in the missing amounts. (Enter your answers in thousands of dollars. Cash deficiencies and Repayments should be indicated by a minus sign.) Cash balance, beginning Add collections from customers Total cash available Less disbursements: Purchase of inventory Selling and administrative expenses Equipment purchases Dividends Total disbursements Excess (deficiency) of cash available over disbursements Financing: Borrowings Repayments (including interest)* Total financing Cash balance, ending *Interest will total $1,000 for the year. Quarter 1 (000 omitted) $ 9 97 54 7 2 (5) Quarter 2 (000 omitted) 64 45 9 2 120 12 Quarter 3 (000 omitted) 124 30 29 2 12 Quarter 4 (000 omitted) 30 2 (12) Year (000 omitted) 431 137 55arrow_forwardA cash budget, by quarters, is given below for a retail company (000 omitted). The company requires a minimum cash balance of at least $3,000 to start each quarter. Required: Fill in the missing amounts. (Enter your answers in thousands of dollars. Cash deficiencies and Repayments should be indicated by a minus sign.) Cash balance, beginning Add collections from customers Total cash available Less disbursements: Purchase of inventory Selling and administrative expenses Equipment purchases Dividends Total disbursements Excess (deficiency) of cash available over disbursements Financing: Borrowings Repayments (including interest)* Total financing Cash balance, ending *Interest will total $1,000 for the year. 69 $ 1 8 94 49 12 2 (1) Quarter (000 omitted) 2 3 59 45 59 9 2 115 17 110 30 24 2 5 4 33 2 IN (20) (000 omitted) Year 400 130 55arrow_forwardA cash budget, by quarters, is given below for a retail company (000 omitted). The company requires a minimum cash balance of at least $4,000 to start each quarter. Required: Fill in the missing amounts. (Enter your answers in thousands of dollars. Cash deficiencies and Repayments should be indicated by a minus sign.) Cash balance, beginning Add collections from customers Total cash available Less disbursements: Purchase of inventory Selling and administrative expenses Equipment purchases Dividends Total disbursements Excess (deficiency) of cash available over disbursements Financing: Borrowings Repayments (including interest)* Total financing Cash balance, ending *Interest will total $1,000 for the year. Quarter 1 Quarter 2 (000 omitted) (000 omitted) $ 8 83 41 13 2 (3) 51 32 8 2 93 11 Quarter 3 (000 omitted) 102 30 16 2 10 Quarter 4 (000 omitted) 33 2 (13) Year (000 omitted) 357 112 47arrow_forward
- A cash budget, by quarters, is given below for a retail company (000 omitted). The company requires a minimum cash balance of $4,000 to start each quarter. Required: Fill in the missing amounts. Note: Enter your answers in thousands of dollars. Cash deficiencies and Repayments should be indicated by a minus sign. Cash balance, beginning Add collections from customers Total cash available Less disbursements: Quarter (000 omitted) (000 omitted) 1 2 3 4 Year 6 $ 4 $ 4 $ 4 6 Assessment Tool iFrame 63 96 108 104 369 69 100 112 108 375 Purchase of inventory 47 Selling and administrative expenses 15 530 57 51 31 186 32 30 21 98 Equipment purchases 10 9 22 10 51 Dividends 2 2 2 2 8 Total disbursements Excess (deficiency) of cash available over disbursements 74 100 105 64 343 (5) (1) 7 44 32 Financing: Borrowings Repayments (including interest) * Total financing 9 6 14 (2) (13) (15) 9 6 (2) (13) (1) Cash balance, ending $ 4 $ 4 $ EA 5 31 31 *Interest will total $1,000 for the year.arrow_forwardA cash budget, by quarters, is given below for a retail company (000 omitted). The company requires a minimum cash balance of at least $8,000 to start each quarter. Required: Fill in the missing amounts. Note: Enter your answers in thousands of dollars. Cash deficiencies and Repayments should be indicated by a minus sign. 1 Quarter (000 omitted) (000 omitted) 2 3 4 Year Cash balance, beginning $ 9 Add collections from customers 61 103 347 Total cash available 70 Less disbursements: Purchase of inventory 42 52 34 Selling and administrative expenses 32 30 103 Equipment purchases 14 8 17 49 Dividends Total disbursements Excess (deficiency) of cash available over disbursements 2 2 2 94 (8) 14 Financing: Borrowings Repayments (including interest)* Total financing 10 (21)arrow_forwardThere are only 3 parts to this question. Please answer according to the image posted below. Problem 8-21 (Algo) Schedules of Expected Cash Collections and Disbursements [LO8-2, LO8-4, LO8-8] You have been asked to prepare a December cash budget for Ashton Company, a distributor of exercise equipment. The following information is available about the company’s operations: The cash balance on December 1 is $56,600. Actual sales for October and November and expected sales for December are as follows: October November December Cash sales $ 71,200 $ 73,400 $ 86,200 Sales on account $ 440,000 $ 576,000 $ 639,000 Sales on account are collected over a three-month period as follows: 20% collected in the month of sale, 60% collected in the month following sale, and 18% collected in the second month following sale. The remaining 2% is uncollectible. Purchases of inventory will total $315,000 for December. Thirty percent of a month’s inventory purchases are paid…arrow_forward
- A cash budget, by quarters, is given below for a retail company (000 omitted). The company requires a minimum cash ba of $7,000 to start each quarter. Required: Fill in the missing amounts. Note: Enter your answers in thousands of dollars. Cash deficiencies and Repayments should be indicated by a minus Quarter (000 omitted) (000 omitted) 1 2 3 4 Year Cash balance, beginning $ 7 $ 7 Add collections from customers 84 88 105 378 Total cash available 91 95 Less disbursements: Purchase of inventory 44 54 28 Selling and administrative expenses Equipment purchases 41 32 30 124 8 8 19 45 Dividends 2 2 2 2 Total disbursements 95 96 Excess (deficiency) of cash available over disbursements (2) (1) 12arrow_forwardA cash budget, by quarters, is given below for a retail company (000 omitted). The company requires a minimum cash balance of at least $4,000 to start each quarter. Fill in the missing amounts. Note: Enter your answers in thousands of dollars. Cash deficiencies and Repayments should be indicated by a minus sign. Quarter (000 omitted) (000 omitted) 1 2 3 4 Year Cash balance, beginning $ 7 Add collections from customers 109 392 Total cash available 89 Less disbursements: * Purchase of inventory 48 58 32 Selling and administrative expenses 45 30 127 Equipment purchases 11 9 23 53 Dividends 2 2 2 2 Total disbursements 114 Excess (deficiency) of cash available over disbursements (2) 7 Financing: Borrowings Repayments (including interest) * Total financing Cash balance, ending "Interest will total $1,000 for the year. 18 (22)arrow_forwardA cash budget, by quarters, is given below for a retail company (000 omitted). The company requires a minimum cash balance of at least $6,000 to start each quarter. Fill in the missing amounts. (Enter your answers in thousands of dollars. Cash deficiencies and Repayments should be indicated by a minus sign.) Quarter (000 omitted) 2 3 4 Year Cash balance, beginning 8. 8 Add collections from customers 59 98 325 Total cash available 67 333 Less disbursements: Purchase of inventory 37 47 29 Selling and administrative expenses 22 30 30 21 103 Equipment purchases 10 12 10 41 Dividends 2 2 8 Total disbursements 70 89 62 Excess (deficiency) of cash available over disbursements (3) 14 Financing Borrowings 15 Repayments (including interest)* (17) Total financing Cash balance, ending "Interest will total $1,000 for the year. down (only allotted a hour) Show transcribed image text A cash budget. by quarters. is given below for a retail company (000 omitted). The company requires a minimum cash…arrow_forward
- A cash budget, by quarters, is given below for a retail company (000 omitted). The company requires a minimum cash balance of at least $3,000 to start each quarter. Fill in the missing amounts. (Enter your answers in thousands of dollars. Cash deficiencies and Repayments should be indicated by a minus sign.)arrow_forwardA cash budget, by quarters, is given below for a retall company (000 omitted). The company requires a minimum cash balance of at least $6,000 to start each quarter. Required: Fill in the missing amounts. (Enter your answers in thousands of dollars. Cash deficiencies and Repayments should be indicated by a minus sign.) Cash balance, beginning Add collections from customers Total cash available Less disbursements: Purchase of inventory Selling and administrative expenses Equipment purchases Dividends Total disbursements Excess (deficiency) of cash available over disbursements Financing: Borrowings Repayments (including interest) Total financing Cash balance, ending interest will total $1,000 the Quarter 1 (000 omitted) $ 6 S 80 86 43 34 15 Quarter 2 (000 omitted) 2 94 (8) 6 S 53 32 8 2 Quarter 3 (000 omitted) 95 6 104 110 30 18 2 11 Quarter 4 (000 omitter) $ 35 10 2 (10) Year (000 omitted) $ 6 370 118 51 8arrow_forwardWellness Products, needs a cash budget for September. The following information is available: 1. The cash balance at the beginning of August is 9,000€. 2. Contribution margin is 50% (COGS are 50% of sales) 3. Actual sales for July and expected sales for August, September and October are as shown below. Some customers pay in cash (Cash sales) and others in account as described in the figure below. Customers that pay in account, make the payment the month after. 4. Purchases of inventory (company just resells what they buy) must be done so that the end of month inventory must cover 20% of next month sales. Initial inventory in July was 5.300€. 100% of a month's inventory purchases are paid for during the month of purchase. 1. Prepare a schedule of expected cash collections for August, September & October. 2. Prepare a merchandise purchases budget for July, August, and September. 3. Prepare a schedule of expected cash flow (cash in minus cash out) for August, and September. Cash Sales…arrow_forward
- Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning