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Chapter 20: 20-4QS-b (page 913)

Grace manufactures and sells miniature digital cameras for $250 each. 1,000 units were sold in May, and management forecasts 4% growth in unit sales each month.

Determine: (b) the dollar amount of camera sales for the month of June.

Short Answer

Expert verified

The dollar amount of camera sales for the month of June is$260,000.

Step by step solution

01

Computation of the dollar amount of camera sales

Amountofcamerasales=NumberofunitsofcamerasalesxSellingpriceperunit=1,040unitsx$250=$260,000

02

Working notes

Numberofunitsofcamerasales=Totalunits=(TotalunitsxGrowthrate)=1,000units=(1,000unitsx4100)=1,000units=40units=1,040units

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Most popular questions from this chapter

Big Sound, a merchandising company specializing in home computer speakers, budgets its monthly cost of goods sold to equal 70% of sales. Its inventory policy calls for ending inventory at the end of each month to equal 20% of the next month’s budgeted cost of goods sold. All purchases are on credit, and 25% of the purchases in a month is paid for in the same month. Another 60% is paid for during the first month after purchase, and the remaining 15% is paid for in the second month after purchase. The following sales budgets are set: July, \(350,000; August, \)290,000; September, \(320,000; October, \)275,000; and November, $265,000.

Compute the following:

(1) budgeted merchandise purchases for July, August, September, and October;

(2) budgeted payments on accounts payable for September and October; and

(3) budgeted ending balances of accounts payable for September and October. (Hint: For part 1, refer to Exhibits 20A.2 and 20A.3 for guidance, but note that budgeted sales are in dollars for this assignment.)

Zisk Co. purchases raw materials on account. Budgeted purchase amounts are: April, \(80,000; May, \)110,000; and June, \(120,000. Payments are made as follows: 70% in the month of purchase and 30% in the month after purchase. The March 31 balance of accounts payable is \)22,000. Prepare a schedule of budgeted cash payments for April, May, and June

Use the following information to prepare the July cash budget for Acco Co. It should show expected cash receipts and cash payments for the month and the cash balance expected on July 31.

a. Beginning cash balance on July 1: \(50,000.

b. Cash receipts from sales: 30% is collected in the month of sale, 50% in the next month, and 20% in the second month after sale (uncollectible accounts are negligible and can be ignored). Sales amounts are: May (actual), \)1,720,000; June (actual), \(1,200,000; and July (budgeted), \)1,400,000.

c. Payments on merchandise purchases: 60% in the month of purchase and 40% in the month following purchase. Purchases amounts are: June (actual), \(700,000; and July (budgeted), \)750,000.

d. Budgeted cash payments for salaries in July: \(275,000.

e. Budgeted depreciation expense for July: \)36,000.

f. Other cash expenses budgeted for July: \(200,000.

g. Accrued income taxes due in July: \)80,000.

h. Bank loan interest paid in July: $6,600.

Following are selected accounts for a company. For each account, indicate whether it will appear on a budgeted income statement (BIS) or a budgeted balance sheet (BBS). If an item will not appear on either budgeted financial statement, label it NA.

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Office salaries expense . . . . . . . . . . . . . . .

Accumulated depreciation . . . . . . . . . . . . .

Amortization expense . . . . . . . . . . . . . . .

Interest expense on loan payable . . . . . . .

Cash dividends paid . . . . . . . . . . . . . . . . . .

Bank loan owed . . . . . . . . . . . . . . . . . . . . .

Cost of goods sold . . . . . . . . . . . . . . . . . .

Mike’s Motors Corp. manufactures motors for dirt bikes. The company requires a minimum \(30,000 cash balance at each month-end. If necessary, the company borrows to meet this requirement, at a cost of 2% interest per month (paid at the end of each month). Any cash balance above \)30,000 at month-end is used to repay loans. The cash balance on July 1 is $34,000, and the company has no outstanding loans at that time. Forecasted cash receipts and forecasted cash payments (other than for loan activity) are as follows. Prepare a cash budget for July, August, and September.
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