231. Which of the following is a financial budget?
a. cost of goods sold budget
b. budgeted balance sheet
c. marketing expense budget
d. production budget
232. Mikhail Corporation has the following sales forecasts for the first three months of 2016:
Month Sales
January $36,000
February 24,000
March 40,000
Sixty-five percent of sales are collected in the month of the sale and the remainder are collected in the following month. Mikhail will borrow from its bank to maintain its minimum cash balance.
Accounts receivable balance (January 1, 2016) $16,000
Cash balance (January 1, 2016) 12,000
Minimum cash balance needed 20,000
What is the cash balance at the end of January, assuming that cash is received only from customers and that $48,000 is paid out during January?
a. $19,400
b. $23,400
c. $20,000
d. $21,000
$12,000 + $16,000 + (0.65 × $36,000) – $48,000 = $ 3,400
Amount borrowed to meet minimum 20,000
Total $23,400
233. Mikhail Corporation has the following sales forecasts for the first three months of 2016:
Month Sales
January $36,000
February 24,000
March 40,000
Sixty-five percent of sales are collected in the month of the sale and the remainder are collected in the following month.
Accounts receivable balance (January 1, 2016) $16,000
Cash balance (January 1, 2016) 12,000
Minimum cash balance is $20,000. Cash can be borrowed in $1,000 increments from the local bank (assume no interest charges).
How much cash would be collected in March from sales?
a. $32,000
b. $58,400
c. $48,000
d. $34,400
($40,000 × 0.65) + ($24,000 × 0.35) = $34,400
Figure 8-4
Discus Productions needs to know its anticipated cash inflows for the next quarter by month. Cash sales are 10 percent of total sales each month. Historically, sales on account have been collected as follows: 60 percent in the month of sale, 30 percent in the month after the sale, and the remaining 10 percent two months after the sale. Sales for the quarter are projected as follows: April, $120,000; May, $100,000; and June, $80,000. Accounts receivable on March 31 were $60,000.
234. Refer to Figure 8-4. The expected cash collections of Discus Productions for June are
a. $48,000.
b. $98,000.
c. $68,000.
d. $89,000.
($80,000 × 0.10) + ($80,000 × 0.90 × 0.60) +
($100,000 × 0.90 ×0.30) + ($120,000 × 0.90 × 0.10) = $89,000
235. Refer to Figure 8-4. Discus Productions would expect to have an accounts receivable balance on June 30 of
a. $37,800.
b. $42,000.
c. $32,000.
d. $28,800.
($80,000 × 0.90 × 0.40) + ($100,000 × 0.90 × 0.10) = $37,800
236. Shiller Corporation has the following sales forecasts for the selected three-month period in 2016:
Month Sales
July $24,000
August 14,000
September 16,000
All sales are on account. Seventy percent of sales are collected in the month of the sale, and the remainder are collected in the following month.
Accounts receivable balance (July 1, 2016) $20,000
Cash balance (July 1, 2016) 10,000
Minimum cash balance is $10,000. Cash can be borrowed in $1,000 increments from the local bank (assume no interest charges).
How much cash would be collected in September from sales?
a. $15,400
b. $17,000
c. $16,000
d. $20,000
($16,000 × 0.70) + ($14,000 × 0.30) = $15,400
237. Shiller Corporation has the following sales forecasts for the selected three-month period in 2016:
Month Sales
July $24,000
August 14,000
September 16,000
All sales are on account. Seventy percent of sales are collected in the month of the sale, and the remainder are collected in the following month.
Accounts receivable balance (July 1, 2016) $20,000
Cash balance (July 1, 2016) 10,000
Minimum cash balance is $10,000. Cash can be borrowed in $1,000 increments from the local bank (assume no interest charges).
What is the cash balance at the end of July, assuming that cash is received only from customers and that $40,000 is paid out during July?
a. $20,000
b. $16,800
c. $6,800
d. $10,800
$10,000 + $20,000 + ($24,000 × 0.70) – $40,000 = $ 6,800
Amount borrowed to meet minimum 4,000
Total $10,800
238. Natasha Company has a sales budget for next month of $150,000. Cost of goods sold is expected to be 40 percent of sales. All goods are purchased in the month used and paid for in the month following purchase. The beginning inventory of merchandise is $5,000, and an ending inventory of $6,000 is desired. Beginning accounts payable is $38,000.
For Natasha Company, the ending accounts payable should be
a. $39,000.
b. $61,000.
c. $89,000.
d. $91,000.
($150,000 × 0.40) + $6,000 – $5,000 = $61,000
239. Quicksand Corporation has a sales budget for next month of $50,000. Cost of goods sold is expected to be 60 percent of sales. All goods are purchased in the month used and paid for in the month following their purchase. The beginning inventory of merchandise is $1,500 and an ending inventory of $2,000 is desired. Beginning accounts payable is $13,000.
The ending accounts payable for Quicksand Corporation should be
a. $30,500
b. $30,000
c. $13,000
d. $29,500
($50,000 × 0.60) + $2,000 – $1,500 = $30,500
240. Firefly Manufacturing Company needs to know its anticipated cash inflows for the next quarter by month. Cash sales are 20 percent of total sales each month. Historically, sales on account have been collected as follows: 50 percent in the month of the sale, 35 percent in the month after the sale, and the remaining 15 percent two months after the sale. Sales for the quarter are projected as follows: January, $60,000; February, $30,000; and March,
$90,000. Accounts receivable on December 31 were $45,000.
Firefly Manufacturing Company would expect to have an accounts receivable balance on March 31 of
a. $45,000
b. $55,500
c. $39,600
d. $90,000
($30,000 × 0.80 × 0.15) + ($90,000 × 0.80 × 0.50) = $39,600
a. cost of goods sold budget
b. budgeted balance sheet
c. marketing expense budget
d. production budget
232. Mikhail Corporation has the following sales forecasts for the first three months of 2016:
Month Sales
January $36,000
February 24,000
March 40,000
Sixty-five percent of sales are collected in the month of the sale and the remainder are collected in the following month. Mikhail will borrow from its bank to maintain its minimum cash balance.
Accounts receivable balance (January 1, 2016) $16,000
Cash balance (January 1, 2016) 12,000
Minimum cash balance needed 20,000
What is the cash balance at the end of January, assuming that cash is received only from customers and that $48,000 is paid out during January?
a. $19,400
b. $23,400
c. $20,000
d. $21,000
$12,000 + $16,000 + (0.65 × $36,000) – $48,000 = $ 3,400
Amount borrowed to meet minimum 20,000
Total $23,400
233. Mikhail Corporation has the following sales forecasts for the first three months of 2016:
Month Sales
January $36,000
February 24,000
March 40,000
Sixty-five percent of sales are collected in the month of the sale and the remainder are collected in the following month.
Accounts receivable balance (January 1, 2016) $16,000
Cash balance (January 1, 2016) 12,000
Minimum cash balance is $20,000. Cash can be borrowed in $1,000 increments from the local bank (assume no interest charges).
How much cash would be collected in March from sales?
a. $32,000
b. $58,400
c. $48,000
d. $34,400
($40,000 × 0.65) + ($24,000 × 0.35) = $34,400
Figure 8-4
Discus Productions needs to know its anticipated cash inflows for the next quarter by month. Cash sales are 10 percent of total sales each month. Historically, sales on account have been collected as follows: 60 percent in the month of sale, 30 percent in the month after the sale, and the remaining 10 percent two months after the sale. Sales for the quarter are projected as follows: April, $120,000; May, $100,000; and June, $80,000. Accounts receivable on March 31 were $60,000.
234. Refer to Figure 8-4. The expected cash collections of Discus Productions for June are
a. $48,000.
b. $98,000.
c. $68,000.
d. $89,000.
($80,000 × 0.10) + ($80,000 × 0.90 × 0.60) +
($100,000 × 0.90 ×0.30) + ($120,000 × 0.90 × 0.10) = $89,000
235. Refer to Figure 8-4. Discus Productions would expect to have an accounts receivable balance on June 30 of
a. $37,800.
b. $42,000.
c. $32,000.
d. $28,800.
($80,000 × 0.90 × 0.40) + ($100,000 × 0.90 × 0.10) = $37,800
236. Shiller Corporation has the following sales forecasts for the selected three-month period in 2016:
Month Sales
July $24,000
August 14,000
September 16,000
All sales are on account. Seventy percent of sales are collected in the month of the sale, and the remainder are collected in the following month.
Accounts receivable balance (July 1, 2016) $20,000
Cash balance (July 1, 2016) 10,000
Minimum cash balance is $10,000. Cash can be borrowed in $1,000 increments from the local bank (assume no interest charges).
How much cash would be collected in September from sales?
a. $15,400
b. $17,000
c. $16,000
d. $20,000
($16,000 × 0.70) + ($14,000 × 0.30) = $15,400
237. Shiller Corporation has the following sales forecasts for the selected three-month period in 2016:
Month Sales
July $24,000
August 14,000
September 16,000
All sales are on account. Seventy percent of sales are collected in the month of the sale, and the remainder are collected in the following month.
Accounts receivable balance (July 1, 2016) $20,000
Cash balance (July 1, 2016) 10,000
Minimum cash balance is $10,000. Cash can be borrowed in $1,000 increments from the local bank (assume no interest charges).
What is the cash balance at the end of July, assuming that cash is received only from customers and that $40,000 is paid out during July?
a. $20,000
b. $16,800
c. $6,800
d. $10,800
$10,000 + $20,000 + ($24,000 × 0.70) – $40,000 = $ 6,800
Amount borrowed to meet minimum 4,000
Total $10,800
238. Natasha Company has a sales budget for next month of $150,000. Cost of goods sold is expected to be 40 percent of sales. All goods are purchased in the month used and paid for in the month following purchase. The beginning inventory of merchandise is $5,000, and an ending inventory of $6,000 is desired. Beginning accounts payable is $38,000.
For Natasha Company, the ending accounts payable should be
a. $39,000.
b. $61,000.
c. $89,000.
d. $91,000.
($150,000 × 0.40) + $6,000 – $5,000 = $61,000
239. Quicksand Corporation has a sales budget for next month of $50,000. Cost of goods sold is expected to be 60 percent of sales. All goods are purchased in the month used and paid for in the month following their purchase. The beginning inventory of merchandise is $1,500 and an ending inventory of $2,000 is desired. Beginning accounts payable is $13,000.
The ending accounts payable for Quicksand Corporation should be
a. $30,500
b. $30,000
c. $13,000
d. $29,500
($50,000 × 0.60) + $2,000 – $1,500 = $30,500
240. Firefly Manufacturing Company needs to know its anticipated cash inflows for the next quarter by month. Cash sales are 20 percent of total sales each month. Historically, sales on account have been collected as follows: 50 percent in the month of the sale, 35 percent in the month after the sale, and the remaining 15 percent two months after the sale. Sales for the quarter are projected as follows: January, $60,000; February, $30,000; and March,
$90,000. Accounts receivable on December 31 were $45,000.
Firefly Manufacturing Company would expect to have an accounts receivable balance on March 31 of
a. $45,000
b. $55,500
c. $39,600
d. $90,000
($30,000 × 0.80 × 0.15) + ($90,000 × 0.80 × 0.50) = $39,600
