Forty percent are collected in the month of sale 58

Info icon This preview shows pages 47–52. Sign up to view the full content.

View Full Document Right Arrow Icon
All sales at McCracken are on credit. Forty percent are collected in the month of sale, 58% in the month  following the sale, and the remaining 2% are uncollectible. Merchandise purchases are paid in full the  month following the month of purchase. The selling and administrative expenses above include $8,000 of  depreciation on display fixtures and warehouse equipment. All other selling and administrative expenses  are paid as incurred. McCracken wants to maintain a cash balance of $15,000. Any amount below this can be borrowed from a local bank as needed in increments of $1,000. All borrowings are made at month end. Required: Prepare McCracken’s cash budget for the month of May. Use good form. McCracken expects to have  $24,000 of cash on hand at the beginning of May. Level: Medium    LO:  2,3,7,8     Brewer, Introduction to Managerial Accounting, 3/e 147
Image of page 47

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Ans:   123. The Fraley Company, a merchandising firm, has planned the following sales for the next four  months: Sales are made 40% for cash and 60% on account. From experience, the company has learned that a  month’s sales on account are collected according to the following pattern: The company requires a minimum cash balance of $4,000 to start a month. Required: (a.) Compute the budgeted cash receipts for June. (b.) Assume the following budgeted data for June: Brewer, Introduction to Managerial Accounting, 3/e 148
Image of page 48
Using this data, along with your answer to part (1) above, prepare a cash budget in good form for June.  Clearly show any borrowing needed during the month. The company can borrow in any dollar amount,  but will not pay any interest until the following month. Level: Medium    LO:  2,8     Ans:   124. Bledso Supply Corporation manufactures and sells cotton gauze. Expected sales of gauze (in boxes)  for upcoming months are as follows: Management likes to maintain a finished goods inventory equal to 25% of the next month’s estimated  sales. Required: Prepare the company’s production budget for the third quarter of this year (the months of July, August  and September) in good form. Include a column for each month and a total column for the entire quarter. Brewer, Introduction to Managerial Accounting, 3/e 149
Image of page 49

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Level: Medium    LO:  3     Brewer, Introduction to Managerial Accounting, 3/e 150
Image of page 50
Ans:  
Image of page 51

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 52
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern