BMGT440Practicehwch26-27-28

BMGT440Practicehwch26-27-28 - Chapters 26 & 27 & 28...

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Practice Problems 1 These problems are from the 8 th edition of the text. 12. The sales budget for your company in the coming year is based on a 20 percent quarterly growth rate with the first-quarter sales projections at $100 million. In addition to this basic trend, the seasonal adjustments for the four quarters are 0, -$10, -$5, and $15 million, respectively. Generally, 50% of the sales can be collected within the quarter and 45% in the following quarter; the rest of the sales are bad debt. The bad debts are written off in the second quarter after the sales are made. The beginning accounts payable balance is $81 million. Assuming all sales are on credit, compute the cash collections from sales for each quarter. 12. First, we need to calculate the sales from the last quarter of the previous year. Since 50 percent of the sales were collected in that quarter, the sales figure must have been: Sales last quarter of pervious year = $ 81,000,000 / (1 – .50) Sales last quarter of pervious year = $ 162,000,000 Now we can estimate the sales growth each quarter, and calculate the net sales including the seasonal adjustments. The sales figures for each quarter will be: Quarter 1 Quarter 2 Quarter 4 Quarter 4 Sales (basic trend) $ 100,000,000 $ 120,000,000 $ 144,000,000 $ 172,800,000 Seasonal adjustment 0 –10,000,000 –5,000,000 15,000,000 Sales projection 100,000,000 110,000,000 139,000,000 187,800,000 Since 50 percent of sales are collected in the quarter the sales are made, and 45 percent of sales are collected in the quarter after the sales are made, the cash budget is: Quarter 1 Quarter 2 Quarter 4 Quarter 4 Collected within quarter $ 50,000,000 $ 55,000,000 $ 69,500,000 $ 93,900,000 Collection from previous quarter 72,900,000 45,000,000 49,500,000 62,550,000 Cash collections from sales $ 122,900,000 $ 100,000,000 $ 119,000,000 $ 56,450,000 14. Calculating the Cash Budget Wildcat, Inc., has estimated sales (in millions) for the next four quarters as follows: Q1 Q2 Q3 Q4 Sales $250 $200 $270 $300 Sales for the first quarter of the year after this one are projected at $250 million. Accounts Receivable at the beginning of the year were $80 million. Wildcat has a 45 day collection period. Wildcat’s purchases from suppliers in a quarter are equal to 45 percent of the next quarter’s forecast sales, and suppliers are normally paid in 30 days. Wages, taxes, and other expenses run about 30 percent of sales. Interest and dividends are $15 million per quarter. Wildcat plans a major capital outlay in the second quarter of $100 million. Finally, the company started the year with a $45 million cash balance and wishes to maintain a $45 million balance. Complete a cash budget by filling in the following:
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BMGT440Practicehwch26-27-28 - Chapters 26 & 27 & 28...

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