DEPARTMENT
June2017SupportPackage.pdf

C 211500 d cso 1b5b los 1b5u brooke companys

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c. $211,500. d. $228,500.
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43 110. CSO: 1B5b LOS: 1B5u Brooke Company’s management team is preparing a cash budget for the coming quarter. The following budgeted information is under review. January February March Revenue $700,000 $800,000 $500,000 Inventory purchases 350,000 425,000 225,000 Other expenses 150,000 175,000 175,000 The company expects to collect 40% of its monthly sales in the month of sale and 60% in the following month. 50% of inventory purchases are paid in the month of purchase, and 50% in the following month. Payments for all other expenses are made in the month incurred. Brooke forecasts the following account balances at the beginning of the quarter. Cash $200,000 Accounts receivable 300,000 Accounts payable (Inventory) 400,000 Given the above information, the projected ending cash balance for February will be a. $712,500. b. $500,000. c. $232,500. d. $120,000.
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44 111. CSO: 1B5b LOS: 1B5u Health Foods Inc. has decided to start a cash budgeting program to improve overall cash management. Information gathered from the past year reveals the following cash collection trends. 40% of sales are on credit 50% of credit sales are collected in month of sale 30% of credit sales are collected first month after sale 15% of credit sales are collected second month after sale 5% of credit sales result in bad debts Gross sales for the last five months were as follows. January $220,000 February 240,000 March 250,000 April 230,000 May 260,000 Sales for June are projected to be $255,000. Based on this information, the expected cash receipts for March would be a. $230,000. b. $237,400. c. $242,000. d. $243,200.
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45 112. CSO: 1B5b LOS: 1B5u Tidwell Corporation sells a single product for $20 per unit. All sales are on account, with 60% collected in the month of sale and 40% collected in the following month. A schedule of cash collections for January through March of the coming year reveals the following receipts for the period. Cash Receipts January February March December receivables $32,000 From January sales 54,000 $36,000 From February sales 66,000 $44,000 From March sales 72,000 Other information includes the following. Inventories are maintained at 30% of the following month’s sales. Tidwell desires to keep a minimum cash balance of $15,000. Total payments in January are expected to be $106,500, which excludes $12,000 of depreciation expense. Any required borrowings are in multiples of $1,000. The December 31 balance sheet for the preceding year revealed a cash balance of $24,900. Ignoring income taxes, the financing needed in January to maintain the firm’s minimum cash balance is a. $8,000. b. $10,600. c. $11,000. d. $23,000.
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46 113. CSO: 1B5b LOS: 1B5u Data regarding Johnsen Inc.’s forecasted dollar sales for the last seven months of the year and Johnsen’s projected collection patterns are as follows. Forecasted sales June $700,000 July 600,000 August 650,000 September 800,000 October 850,000 November 900,000 December 840,000 Types of sales Cash sales 30% Credit sales 70% Collection pattern on credit sales (5% determined to be uncollectible) During the month of sale 20% During the first month following the sale 50% During the second month following the sale 25% Johnsen’s budgeted cash receipts from sales and collections on account for September are a. $635,000.
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