Chapter 13 Dividend Policy and Internal Financing

25) All of the following are found in the cash budget EXCEPT

A) a net change in cash for the period.

B) accounts receivable.

C) cash disbursements.

D) new financing needed.

26) The primary purpose of a cash budget is to

A) determine the level of investment in current and fixed assets.

B) determine financing needs.

C) provide a detailed plan of future cash flows.

D) determine the estimated income tax for the year.

27) Which of the following is always a non-cash expense?

A) income taxes

B) salaries

C) depreciation

D) none of the above

28) A company collects 25% of its sales during the month of sale, 65% one month after the sale, and 10% two months after the sale. The company expects sales of $50,000 in August, $80,000 in September, $90,000 in October, and $60,000 in November. How much money is expected to be collected in October?

A) $90,000

B) $79,500

C) $55,000

D) $22,500

29) Plato Industries' projected sales for the first six months of 2012 are given below:

Jan. $250,000 April $300,000

Feb. $340,000 May $350,000

Mar. $280,000 June $380,000

20% of sales are collected in cash at time of sale, 50% are collected in the month following the sale, and the remaining 30% are collected in the second month following the sale. Cost of goods sold is 85% of sales. Purchases are made in the month prior to the sales, and payments for purchases are made in the month of the sale. Total other cash expenses are $70,000/month. The company's cash balance as of February 28, 2012 will be $10,000. Excess cash will be used to retire short-term borrowing (if any). Plato has no short term borrowing as of February 28, 2012. Ignore any interest on short-term borrowing. The company must have a minimum cash balance of $40,000 at the beginning of each month. What is Plato Industries' total cash receipts for April 2012?

A) $340,000

B) $326,000

C) $302,000

D) $300,000

30) Plato Industries' projected sales for the first six months of 2012 are given below:

Jan. $250,000 April $300,000

Feb. $340,000 May $350,000

Mar. $280,000 June $380,000

20% of sales are collected in cash at time of sale, 50% are collected in the month following the sale, and the remaining 30% are collected in the second month following the sale. Cost of goods sold is 85% of sales. Purchases are made in the month prior to the sales, and payments for purchases are made in the month of the sale. Total other cash expenses are $70,000/month. The company's cash balance as of February 28, 2012 will be $10,000. Excess cash will be used to retire short-term borrowing (if any). Plato has no short term borrowing as of February 28, 2012. Ignore any interest on short-term borrowing. The company must have a minimum cash balance of $40,000 at the beginning of each month. What is Plato Industries' total disbursement in May?

A) $367,500

B) $348,000

C) $425,500

D) $324,000

31) Plato Industries' projected sales for the first six months of 2012 are given below:

Jan. $250,000 April $300,000

Feb. $340,000 May $350,000

Mar. $280,000 June $380,000

20% of sales are collected in cash at time of sale, 50% are collected in the month following the sale, and the remaining 30% are collected in the second month following the sale. Cost of goods sold is 85% of sales. Purchases are made in the month prior to the sales, and payments for purchases are made in the month of the sale. Total other cash expenses are $70,000/month. The company's cash balance as of February 28, 2012 will be $10,000. Excess cash will be used to retire short-term borrowing (if any). Plato has no short term borrowing as of February 28, 2012. Ignore any interest on short-term borrowing. The company must have a minimum cash balance of $40,000 at the beginning of each month. What is Plato Industries' ending cash balance (before borrowing) in March?

A) $12,000

B) $8,000

C) $3,000

D) ($28,000)

32) Plato Industries' projected sales for the first six months of 2012 are given below:

Jan. $250,000 April $300,000

Feb. $340,000 May $350,000

Mar. $280,000 June $380,000

20% of sales are collected in cash at time of sale, 50% are collected in the month following the sale, and the remaining 30% are collected in the second month following the sale. Cost of goods sold is 85% of sales. Purchases are made in the month prior to the sales, and payments for purchases are made in the month of the sale. Total other cash expenses are $70,000/month. The company's cash balance as of February 28, 2012 will be $10,000. Excess cash will be used to retire short-term borrowing (if any). Plato has no short term borrowing as of February 28, 2012. Ignore any interest on short-term borrowing. The company must have a minimum cash balance of $40,000 at the beginning of each month. Plato's projected cumulative short-term borrowing as of April 30, 2012?

A) $25,000

B) $33,000

C) $50,000

D) $60,000

33) Plato Industries' projected sales for the first six months of 2012 are given below:

Jan. $250,000 April $300,000

Feb. $340,000 May $350,000

Mar. $280,000 June $380,000

20% of sales are collected in cash at time of sale, 50% are collected in the month following the sale, and the remaining 30% are collected in the second month following the sale. Cost of goods sold is 85% of sales. Purchases are made in the month prior to the sales, and payments for purchases are made in the month of the sale. Total other cash expenses are $70,000/month. The company's cash balance as of February 28, 2012 will be $10,000. Excess cash will be used to retire short-term borrowing (if any). Plato has no short term borrowing as of February 28, 2012. Ignore any interest on short-term borrowing. The company must have a minimum cash balance of $40,000 at the beginning of each month. Plato's projected EBIT for March 2012?

A) $42,000

B) $23,000

C) ($28,000)

D) ($60,000)

34) Fielding Wilderness Outfitters had projected its sales for the first six months of 2010 to be as follows:

Jan. $250,000 April $300,000

Feb. $340,000 May $350,000

Mar. $280,000 June $380,000

Cost of goods sold is 60% of sales. Purchases are made and paid for two months prior to the sale. 40% of sales are collected in the month of the sale, 40% are collected in the month following the sale, and the remaining 20% in the second month following the sale. Total other cash expenses are $40,000/month. The company's cash balance as of March 1st, 2010 is projected to be $40,000, and the company wants to maintain a minimum cash balance of $15,000. Excess cash will be used to retire short-term borrowing (if any exists). Fielding has no short-term borrowing as of March 1st, 2010. Assume that the interest rate on short-term borrowing is 1% per month. What is Fielding's projected total receipts (collections) for April?

A) $124,000

B) $180,000

C) -$4,000

D) $36,000