mgmt 201 ch 9 questions

A company has a $7,200 cash balance at June 1. The budgeted cash transactions for June are receipts of $53,800 and disbursements of $67,500. If the company's minimum June 30 cash balance is $5,000, what is the budgeted amount to be borrowed during June?

11,500, If the company's minimum June 30 cash balance is $5,000, the budgeted amount to be borrowed during June is $11,500. The amount of borrowing is the cash available less the cash required: $7,200 + $53,800 - $67,500 - $5,000 = $11,500 (the cash deficiency).

A company had sales last month of $120,000 and expects sales this month of $150,000. One third of all sales are cash sales. Two thirds of all sales are collected in the month following the sale. The company should expect total cash collections from sales this month to equal

130,000, The company should expect total cash collections from sales this month to equal $1

Which of the following alternatives reflects the proper order of preparing components of the master budget? Financial Budget Operating Budget Capital Expenditures Budget

2,3,1, Operating budget, capital expenditures budget and financial budget reflect the proper order of preparing components of the master budget. SME: The answer has been rewritten to form a meaningful sentence using the correct option. The operating budget is completed first, followed by the capital expenditures budget and then the financial budget. As the financial budget contains the budgeted financial statements, the other budgets must be prepared prior to the completion of these budgets.

Jay Corporation desires a December 31 ending inventory of 1,500 units. Budgeted sales for December are 2,300 units. The November 30 inventory was 850 units. What are budgeted purchases?

2,950, Budgeted purchases are 2,950. Use the t-account model using units: Inventory Beginning 850 2,300 Sales Purchases 2,950 Ending 1,500

Heath company has beginning inventory of 21,000 units and expected sales of 48,000 units. If the desired ending inventory is 15,500 units, how many units should be purchased?

42,500, If the desired ending inventory is 15,500 units, 42,500 units should be purchased. Use the t-account method using units instead of dollars: Inventory Beginning 21,000 Sales 48,000 Purchases 42,500 Ending 15,500

York enterprises recorded sales of $160,000 during March. Management expects sales to increase 5% in April, 3% in May and 5% in June. Cost of goods sold is expected to be 70% of sales. What is the budgeted gross profit for May?

51,912, The budgeted gross profit for May is $51,912. (Round any decimals to the nearest whole dollar.) March April May June Sales increase $160,000 5% 3% 5% Sales $160,000 $160,000 x 105% = $168,000 $168,000 x 103% = $173,040 $173,040 x 105% = $181,692 CGS $160,000 x 70% = $112,000 $168,000 x 70% = $117,600 $173,040 x 70% = $121,128 $181,692 x 70% = $127,184 Gross Profit $48,000 $50,400 $51,912 $54,508

Which of the following budgets is an operating budget?

Budgeted income statement is an operating budget. The budgeted balance sheet and cash budgets are financial budgets. The capital expenditures budget is a type all its own.

The operating budget usually consists of what budgets?

sales budget, purchases budget, cost of goods sold budget, operating expenses budget, and budgeted income statement. The financial budget is made up of the budgeted financial statements and the budgeted income statement is shared by both categories: operating budget and financial budget

A merchandising company forecasts $150,000 of sales for September. Its gross profit rate is 40% of sales, and its August 31 merchandise inventory is $112,000. The company is moving to a JIT system and budgets inventory of $12,000 for the end of September. Compute the budgeted purchases for September.

$0, The budgeted purchases for September are $0. Desired ending balance $12,000 Required for sales ($150,000 x .6*) 90,000 Total required $102,000 Less beginning balance $112,000 Excess inventory $10,000 We are given the gross profit rate of 40%; therefore, the cost of goods sold rate (cost of inventory) must be 60% of sales.

Bolin's, an elite clothier, expects its November sales to be 30% higher than its October sales of $200,000. Purchases were $100,000 in October and are expected to be $150,000 in November. All sales are on credit and are collected as follows: 30% in the month of the sale and 70% in the following month. Purchases are paid 25% in the month of purchase and 75% in the following month. The beginning cash balance on November 1 is $9,000. What is the ending cash balance on November 30?

$114,500, The ending cash balance on November 30 is $114,500. Using the t-account method: Cash (November) Beginning 9,000 Sales (Oct) 200,000 x 70% = $140,000 Purchases (Oct) 100,000 x 75% = $75,000 Sales (Nov) 200,000 x 130% = $260,000 x 30% = $78,000 Purchases (Nov) 150,000 x 25% = $37,500 Ending 114,500

Given for Maxim Co. (in thousands): April May June July Actual Actual Budgeted Budgeted Cash Sales $90 $60 $70 $90 Sales on account 340 220 320 300 Compute the budgeted cash receipts for June, assuming credit sales are collected as follows: 15% in the month of sale, 60% in the following month and 25% in the month after that.

$335, The budgeted cash receipts for June are $335, assuming credit sales are collected as follows: 15% in month of sale, 60% in the following month and 25% in the month after that. June: $70 + ($320 × 15%) + ($220 × 60%) + ($340 × 25%) = $335

Given for Maxim Co. (in thousands): April May June July Actual Actual Budgeted Budgeted Cash Sales $90 $60 $70 $90 Sales on account 340 220 320 300 Compute the budgeted cash receipts for July, assuming credit sales are collected as follows: 15% in month of sale, 60% in the following month and 25% in the month after that.

$382, The budgeted cash receipts for July are $382, assuming credit sales are collected as follows: 15% in month of sale, 60% in the following month and 25% in the month after that. July: $90 + ($300 × 15%) + ($320 × 60%) + ($220 × 25%) = $382

York enterprises recorded sales of $160,000 during March. Management expects sales to increase 5% in April, 3% in May and 5% in June. Cost of goods sold is expected to be 70% of sales. What is the budgeted gross profit for April?

$50,400, The budgeted gross profit for April in $50,400. (Round any decimals to the nearest whole dollar.) March April May June Sales increase $160,000 5% 3% 5% Sales $160,000 $160,000 x 105% = $168,000 $168,000 x 103% = $173,040 $173,040 x 105% = $181,692 CGS $160,000 x 70% = $112,000 $168,000 x 70% = $117,600 $173,040 x 70% = $121,128 $181,692 x 70% = $127,184 Gross Profit $48,000 $50,400 $51,912 $54,508

The pattern of collections of accounts receivable for a company is 20% in the month of sale, 50% in the following month and 30% in the month after that. Sales on account were $80,000 for January and $60,000 for February. Budgeted sales for March are $70,000. Compute the budgeted cash collections in March

$68,000, The budgeted cash collections in March are $68,000. Collections March A|R Month Sales January February March January 80,000 80,000 x 20% = 16,000 80,000 x 50% = 40,000 80,000 x 30% = 24,000 February 60,000 - 60,000 x 20% = 12,000 60,000 x 50% = 30,000 18,000 March 70,000 - - 70,000 x 20% = 14,000 56,000 68,000 74,000

York enterprises recorded sales of $160,000 during March. Management expects sales to increase 5% in April, 3% in May and 5% in June. Cost of goods sold is expected to be 70% of sales. What is the budgeted gross profit for June?

54, 508, The budgeted gross profit for June is $54,508. (Round any decimals to the nearest whole dollar.) March April May June Sales increase $160,000 5% 3% 5% Sales $160,000 $160,000 x 105% = $168,000 $168,000 x 103% = $173,040 $173,040 x 105% = $181,692 CGS $160,000 x 70% = $112,000 $168,000 x 70% = $117,600 $173,040 x 70% = $121,128 $181,692 x 70% = $127,184 Gross Profit $48,000 $50,400 $51,912 $54,508

A merchandising company has $64,000 of accounts receivable at April 30. In May, it expects to collect 75% of these receivables and 30% of the May sales on account. Its budgeted credit sales for May are $70,000. The budgeted accounts receivable at May 31 would be __________.

65,000, The budgeted accounts receivable at May 31 would be $65,000. The ending accounts receivable balance should equal the beginning balance plus credit sales less collections. Accounts Receivable Beginning 64,000 Credit Sales 70,000 ($64,000 x 75%) + ($70,000 x 30%) = 69,000 Ending 65,000

The pattern of collections of accounts receivable for a company is 20% in the month of sale, 50% in the following month and 30% in the month after that. Sales on account were $80,000 for January and $60,000 for February. Budgeted sales for March are $70,000. Compute the budgeted accounts receivable balance on April 1.

74,000, The budgeted accounts receivable balance on April 1 are $74,000. Collections March A|R Month Sales January February March January 80,000 80,000 x 20% = 16,000 80,000 x 50% = 40,000 80,000 x 30% = 24,000 February 60,000 - 60,000 x 20% = 12,000 60,000 x 50% = 30,000 60,000 - (12,000 + 30,000) = 18,000 March 70,000 - - 70,000 x 20% = 14,000 70,000 - 14,000 = 56,000 68,000 18,000 + 56,000 = 74,000

A merchandising company forecasts $150,000 of sales for September. Its gross profit rate is 40% of sales, and its August 31 merchandise inventory is $112,000. Compute the budgeted purchases for September if the company wishes to budget an inventory of $112,000 for the end of September.

90,000, The budgeted purchases for September if the company wishes to budget an inventory of $112,000 for the end of September are $90,000. Desired ending balance $112,000 Required for sales ($150,000 x .6*) 90,000 Total required $202,000 Less beginning balance $112,000 Purchases $90,000 We are given the gross profit rate of 40%; therefore, the cost of goods sold rate (cost of inventory) must be 60% of sales.

Which of the following is an example of a financial budget?

Budgeted balance sheet is an example of a financial budget. The financial budgets are the cash budget, budgeted balance sheet and budgeted income statement. The sales budget and operating expense budget is included in the operating budget category.

Which of the following statements regarding the budgeting process is true?

Managers prepare short-term and long-term budgets is true regarding the budgeting process. Auditors have no interest or concern in a company's budgets. Budgets are internal documents used for making decisions for a company. Budgets are not used by external users to make decisions about a company. Budgeting is not prepared or designed by top management as they are least likely to have the information necessary to create the budgets and know the day-to-day operations.

The beginning inventory of Drucker & co., is $100,000. The desired ending inventory is 80% of beginning inventory. If cost of goods sold is $300,000, purchases will always:

be less than cost of goods sold. Use the t-account method with random numbers: Inventory Beginning Inventory 100,000 300,000 Cost of Goods Sold Purchases 280,000 Ending Inventory 80,000 Purchases < Cost of Goods Sold

The cash budget combines these things to determine whether there is an excess or deficiency of cash.

beginning cash, cash receipts and cash disbursements, The cash budget combines beginning cash, cash receipts and cash disbursements to determine whether there is an excess or deficiency of cash. Use the t-account method to determine an excess or deficiency of cash: Cash Beginning Cash Cash Receipts Cash disbursements/payments Ending Cash If ending cash is more than the required ending budgeted cash balance, there is an excess of cash and no borrowings, for example, would need to take place. If the ending cash balance is less than required, the company would likely need to borrow cash to make up for the deficiency in cash.

Budgets that plan an organization's ending financial position are called __________.

master budget. The master budget is the culmination of all the budgets: combination of operating and financial budgets. Operating budgets plan a year's basic activities and the needed resources. The financial budgets are the budgeted financial statements. Financial budgets determine the effects of operations and other financing activities on cash and financial position. The capital budget (capital expenditures budgets) is the budget of spending on capital investments (i.e. long-term assets).

Budgets that plan a year's basic activities and the needed resources are called

operating budgets, Budgets that plan a year's basic activities and the needed resources are called operating budgets. Operating budgets plan a year's basic activities and the needed resources. The financial budgets are the budgeted financial statements. Financial budgets determine the effects of operations and other financing activities on cash and financial position. The master budget is the culmination of all the budgets: combination of operating and financial budgets. The capital budget (capital expenditures budgets) is the budget of spending on capital investments (i.e. long-term assets).

Annual master budgets are expressed as 12 monthly target, wherein as one month ends, another month is added to the budget are called __________.

rolling budgets, Annual master budgets are expressed as 12 monthly target, wherein as one month ends, another month is added to the budget are called rolling budgets. Rolling or continuous budgets drop the past month and add on another month in the future in a nonstop process. This helps managers to think farther into the future than just the end of the fiscal year. An operating budget is a plan of the year's activities and needed resources. The master budget is a culmination of all the budgets of a business (i.e. sales budget, operating expenses budget, materials purchases, cash budget, capital budget, etc.).