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The accountant for Jean’s Dress Shop prepared the following
Required
-
Complete the cash budget by filling in the missing amounts.
-
Determine the amount of net
cash flows from operating activities Jean’s will report on the third quarter pro forma statement of cash flows. -
Determine the amount of net cash flows from financing activities Jean’s will report on the third quarter pro forma statement of cash flows.a.
Cash Budget July August September Section 1: Cash receipts Beginning cash balance $25,000 Add cash receipts 90,000 100,000 120,300 Total cash available 115,000 Section 2: Cash payments For inventory purchases 82,750 70,115 87,076 For S&A expenses 27,250 30,280 30,716 For interest expense 0 Total budgeted disbursements 110,000 Section 3: Financing activities Surplus (shortage) 5,000 Borrowing (repayments) 5,000 Ending cash balance $10,000 $0 $0 - b.
Net cash (operating activities) Net cash (financing activities)
- b.
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- In an attempt to better understand RR’s cash position, Johnson developed a cash budget for the first 2 months of the year. She has the figures for the other months, but they are not shown. After looking at the cash budget, answer the following questions: What does the cash budget show regarding the target cash level? Should depreciation expense be explicitly included in the cash budget? Why or why not? What are some other potential cash inflows besides collections? How can interest earned or paid on short-term securities or loans be incorporated in the cash budget? In her preliminary cash budget, Johnson has assumed that all sales are collected and thus that RR has no bad debts. Is this realistic? If not, how would bad debts be dealt with in a cash budgeting sense? (Hint: Bad debts will affect collections but not purchases.)CASH BUDGETING Helen Bowers, owner of Helens Fashion Designs, is planning to request a line of credit from her bank. She has estimated the following sales forecasts for the firm for parts of 2019 and 2020: Estimates regarding payments obtained from the credit department are as follows: collected within the month of sale, 10%; collected the month following the sale, 75%; collected the second month following the sale, 15%. Payments for labor and raw materials are made the month after these services were provided. Here are the estimated costs of labor plus raw materials: General and administrative salaries are approximately 27,000 a month. Lease payments under long-term leases are 9,000 a month. Depreciation charges are 36,000 a month. Miscellaneous expenses are 2,700 a month. Income tax payments of 63,000 are due in September and December. A progress payment of 180,000 on a new design studio must be paid in October. Cash on hand on July 1 will be 132,000, and a minimum cash balance of 90,000 should be maintained throughout the cash budget period. a. Prepare a monthly cash budget for the last 6 months of 2019. b. Prepare monthly estimates of the required financing or excess fundsthat is, the amount of money Bowers will need to borrow or will have available to invest. c. Now suppose receipts from sales come in uniformly during the month (that is, cash receipts come in at the rate of 1/30 each day), but all outflows must be paid on the 5th. Will this affect the cash budget? That is, will the cash budget you prepared be valid under these assumptions? If not, what could be done to make a valid estimate of the peak financing requirements? No calculations are required, although if you prefer, you can use calculations to illustrate the effects. d. Bowers sales are seasonal, and her company produces on a seasonal basis, just ahead of sales. Without making any calculations, discuss how the companys current and debt ratios would vary during the year if all financial requirements were met with short-term bank loans. Could changes in these ratios affect the firms ability to obtain bank credit? Explain.A. Discuss the purpose of the cash budget. B. If the cash for the first quarter of the fiscal year indicates excess cash at the end of each of the first two months, how might the excess cash be used?
- Review the completed master budget and answer the following questions: Is Ranger Industries expecting to earn a profit during the next quarter? If so, how much? Does the company need to borrow cash during the quarter? Can it make any repayments? Explain. (Carefully review rows 74 through 80.)Relevant data from the Poster Companys operating budgets are: Additional data: Capital assets were sold in January for $10,000 and $4,500 in May. Dividends of $4,500 were paid in February. The beginning cash balance was $60,359 and a required minimum cash balance is $59,000. Use this information to prepare a cash budget for the first two quarters of the yearThe accountant for Jean's Dress Shop prepared the following cash budget. Jean's desires to maintain a cash cushion of $10,000 at the end of each month. Funds are assumed to be borrowed and repaid on the last day of each month. Interest is charged at the rate of 1 percent per month. Required a. Complete the cash budget by filling in the missing amounts. b. Determine the amount of net cash flows from operating activities Jean's will report on the third quarter pro forma statement of cash flows. c. Determine the amount of net cash flows from financing activities Jean's will report on the third quarter pro forma statement of cash flows. Complete this question by entering your answers in the tabs below. Req A Req B and C Complete the cash budget by filling in the missing amounts. (Any shortages or repayments should be indicated with a minus sign. Round your answers to the nearest whole dollar amount.) Cash Budget Section 1: Cash receipts Beginning cash balance Add cash receipts Total cash…
- The accountant for Jean’s Dress Shop prepared the following cash budget. Jean’s desires to maintain a cash cushion of $10,000 at the end of each month. Funds are assumed to be borrowed and repaid on the last day of each month. Interest is charged at the rate of 1 percent per month. Required Complete the cash budget by filling in the missing amounts. Determine the amount of net cash flows from operating activities Jean’s will report on the third quarter pro forma statement of cash flows. Determine the amount of net cash flows from financing activities Jean’s will report on the third quarter pro forma statement of cash flows.The accountant for Stuarts Dress Shop prepared the following cash budget. Stuarts desires to maintain a cash balance of $19,000 at the end of each month. Funds are assumed to be borrowed and repaid on the last day of each month. Interest is charged at the rate of 2 percent per month. Required Complete the cash budget by filling in the missing amounts.Determine the amount of net cash flows from operating activities Stuarts will report on the third quarter pro forma statement of cash flows.Determine the amount of net cash flows from financing activities Stuarts will report on the third quarter pro forma statement of cash flows.The accountant for Munoz’s Dress Shop prepared the following cash budget. Munoz’s desires to maintain a cash cushion of $24,000 at the end of each month. Funds are assumed to be borrowed and repaid on the last day of each month. Interest is charged at the rate of 3 percent per month. Required Complete the cash budget by filling in the missing amounts. Determine the amount of net cash flows from operating activities Munoz’s will report on the third quarter pro forma statement of cash flows. Determine the amount of net cash flows from financing activities Munoz’s will report on the third quarter pro forma statement of cash flows.
- The accountant for Adams's Toy Shop prepared the following cash budget. Adams's desires to maintain a cash balance of $15,000 at the end of each month. Funds are assumed to be borrowed and repaid on the last day of each month, and they do not need to be in increment amounts. The company does not have any outstanding debt prior to July interest is charged at the rate of 3 percent per month. Required: a. Complete the cash budget by filling in the missing amounts. Complete this question by entering your answers in the tabs below. Reg A Complete the cash budget by filling in the missing amounts. Note: Any shortages or repayments should be indicated with a minus sign. Round your answers to the nearest whole dollar amount. Cash Budget Section 1: Cash receipts Beginning cash balance Add cash receipts Total cash available Section 2: Cash payments For inventory purchases For S&A expenses For interest expense Total budgeted disbursements $ July 43,000 181,000 224,000 166,026 55,000 0 221,026…Mast Corporation seeks your assistance in developing cash and other budget information for May, June, and July. At April 30, the company had cash of $12,000, accounts receivable of $868,000, inventories of $117,720, and accounts payable of $26,674. The budget is to be based on the following assumptions. • Each month's sales are billed on the last day of the month. • Customers are allowed a 2 percent discount if payment is made within 10 days after the billing date. Receivables are recorded in the accounts at their gross amounts (not net of discounts). • The billings are collected as follows: 65 percent within the discount period, 20 percent by the end of the month, and 12 percent by the end of the following month. Three percent is uncollectible. Purchase data are as follows. • Of all purchases of merchandise and selling, general, and administrative expenses, 64 percent is paid in the month purchased and the remainder in the following month. • The number of units in each month's ending…Vargas Company is preparing a cash budget for April. The company has $27,000 cash at the beginning of April and anticipates $60,000 in cash receipts and $64,500 in cash disbursements during April. Vargas Company has an agreement with its bank to maintain a cash balance of at least $25,000. To maintain the $25,000 required balance, during April the company must: Borrow $2,500 from the owner. Borrow $5,000 from the owner. Borrow $7,500 from the owner. Borrow $4,500 from anyone other than the bank or the owner.
