GRAND CANYON ACC350 WEEK 3 Topic 3 Assignment

Please complete the following exercises and/or problems from the textbook:

E22-24

E22-27

CP22-56

E22A-32

Prepare your answers in an Excel workbook, using one worksheet per exercise or problem.

Save your workbook using the filename LastnameFirstinitial.ACC350.T# where the # represents the topic number. For example, John Doe would submit assignment #5 using the following name: DoeJ.ACC350.T5.

You are not required to submit this assignment to Turnitin.\\\

E22A-32 Preparing an operating budget

Tremont, Inc. sells tire rims. Its sales budget for the nine months ended September

30, 2014, follows:

Quarter Ended Nine-Month

Total

March 31 June 30 Sept 30 Nine Mth Total

Cash sales, 20% $24,000 $34,000 $29,000 $87,000

Credit sales, 80% 96,000 136,000 116,000 348,000

Total sales $120,000 $170,000 $145,000 $435,000

In the past, cost of goods sold has been 40% of total sales. The director of marketing

and the financial vice president agree that each quarter’s ending inventory

should not be below $20,000 plus 10% of cost of goods sold for the following

quarter. The marketing director expects sales of $220,000 during the fourth quarter.

The January 1 inventory was $32,000. Prepare an inventory, purchases, and cost of

goods sold budget for each of the first three quarters of the year. Compute cost of

E22-24 Preparing an operating budget

Sales Budget

Dunbar Company manufactures drinking glasses. One unit is a package of 8 glasses,

which sells for $20. Dunbar projects sales for April will be 3,000 packages, with

sales increasing by 100 packages per month for May, June, and July. On April 1,

Dunbar has 250 packages on hand but desires to maintain an ending inventory of

10% of the next month’s sales. Prepare a sales budget and a production budget for

Dunbar for April, May, and June.

May pkg. produced 3,110\

E22-27 Preparing a financial budget

Cramer Company projects the following sales for the first three months of the

year: $12,500 in January; $13,240 in February; and $14,600 in March. The

company expects 70% of the sales to be cash and the remainder on account. Sales

on account are collected 50% in the month of the sale and 50% in the following

month. The Accounts Receivable account has a zero balance on January 1. Round

to the nearest dollar.

Requirements

1. Prepare a schedule of cash receipts for Cramer for January, February, and

March. What is the balance in Accounts Receivable on March 31?

2. Prepare a revised schedule of cash receipts if receipts from sales on account

are 60% in the month of the sale, 30% in the month following the sale, and

10% in the second month following the sale. What is the balance in Accounts

Receivable on March 31?

P22-56 Preparing a financial budget

This problem continues the Davis Consulting, Inc. situation from Problem P21-63 of

Chapter 21. Assume Davis Consulting began January with $29,000 cash. Management

forecasts that cash receipts from credit customers will be $49,000 in January and

$51,500 in February. Projected cash payments include equipment purchases ($17,000

in January and $40,000 in February) and selling and administrative expenses ($6,000

each month).

Davis’s bank requires a $20,000 minimum balance in the firm’s checking account.

At the end of any month when the account balance falls below $20,000,

the bank automatically extends credit to the firm in multiples of $5,000. Davis

borrows as little as possible and pays back loans each month in $1,000 increments,

plus 5% interest on the entire unpaid principal. The first payment occurs one

month after the loan.

Requirements

1. Prepare Davis Consulting’s cash budget for January and February 2013.

2. How much cash will Davis borrow in February if cash receipts from customers

that month total $21,500 instead of $51,500?