9-1 A budget is a detailed quantitative plan for the acquisition and use of financial and other resources over a given time period. Budgetary control involves the use of budgets to control the 3 страница

3. If the company needs a minimum cash balance of $20,000 to start each month, the loan cannot be repaid in full by June 30. If the loan is repaid in full, the cash balance will drop to only $9,000 on June 30, as shown above. Some portion of the loan balance will have to be carried over to July, at which time the cash inflow should be sufficient to complete repayment.

Problem 9-15 (60 minutes)

1. Schedule of cash receipts:

Cash sales—June...........................................	$ 60,000
Collections on accounts receivable:
May 31 balance..........................................	72,000
June (50% × 190,000).................................	95,000
Total cash receipts.........................................	$227,000
Schedule of cash payments for purchases:
May 31 accounts payable balance...................	$ 90,000
June purchases (40% × 200,000)....................	80,000
Total cash payments......................................	$170,000

Phototec, Inc.
Cash Budget
For the Month of June
Cash balance, beginning................................	$ 8,000
Add receipts from customers (above)...............	227,000
Total cash available........................................	235,000
Less disbursements:
Purchase of inventory (above)......................	170,000
Selling and administrative expenses..............	51,000
Purchases of equipment..............................	9,000
Total cash disbursements...............................	230,000
Excess of receipts over disbursements.............	5,000
Financing:
Borrowings—note........................................	18,000
Repayments—note......................................	(15,000)
Interest.....................................................	(500)
Total financing..............................................	2,500
Cash balance, ending.....................................	$ 7,500

Problem 9-15 (continued)

2.	Phototec, Inc. Budgeted Income Statement For the Month of June
	Sales..................................................		$250,000
	Cost of goods sold:
	Beginning inventory..........................	$ 30,000
	Add purchases.................................	200,000
	Goods available for sale.....................	230,000
	Ending inventory..............................	40,000
	Cost of goods sold.............................		190,000
	Gross margin......................................		60,000
	Selling and administrative expenses ($51,000 + $2,000)............................		53,000
	Net operating income...........................		7,000
	Interest expense.................................		500
	Net income.........................................		$ 6,500

3.	Phototec, Inc. Budgeted Balance Sheet June 30
	Assets
	Cash..................................................................	$ 7,500
	Accounts receivable (50% × 190,000)....................	95,000
	Inventory...........................................................	40,000
	Buildings and equipment, net of depreciation ($500,000 + $9,000 – $2,000).............................	507,000
	Total assets.........................................................	$649,500
	Liabilities and Equity
	Accounts payable (60% × 200,000).......................	$120,000
	Note payable......................................................	18,000
	Capital stock.......................................................	420,000
	Retained earnings ($85,000 + $6,500)...................	91,500
	Total liabilities and equity......................................	$649,500

Problem 9-16 (60 minutes)

1. The sales budget for the third quarter:

	July	Aug.	Sept.	Quarter
Budgeted sales (pairs)...	6,000	7,000	5,000	18,000
Selling price per pair......	× $50	× $50	× $50	× $50
Total budgeted sales......	$300,000	$350,000	$250,000	$900,000

The schedule of expected cash collections from sales:

	July	Aug.	Sept.	Quarter
Accounts receivable, beginning balance..........	$130,000			$130,000
July sales: $300,000 × 40%, 50%.	120,000	$150,000		270,000
August sales: $350,000 × 40%, 50%.		140,000	$175,000	315,000
September sales: $250,000 × 40%.........			100,000	100,000
Total cash collections......	$250,000	$290,000	$275,000	$815,000

2. The production budget for July through October:

	July	Aug.	Sept.	Oct.
Budgeted sales (pairs)...................	6,000	7,000	5,000	4,000
Add desired ending inventory.........	700	500	400	300
Total needs...................................	6,700	7,500	5,400	4,300
Less beginning inventory................	600	700	500	400
Required production (pairs)............	6,100	6,800	4,900	3,900

Problem 9-16 (continued)

3. The direct materials budget for the third quarter:

	July		Aug.		Sept.		Quarter
Required production—pairs (above)..........................	6,100		6,800		4,900		17,800
Raw materials needs per pair...............................	× 2lbs.		× 2lbs.		× 2lbs.		× 2lbs.
Production needs (lbs.)......	12,200		13,600		9,800		35,600
Add desired ending inventory...............................	2,720		1,960		1,560	*	1,560
Total needs.......................	14,920		15,560		11,360		37,160
Less beginning inventory	2,440		2,720		1,960		2,440
Raw materials to be purchased...........................	12,480		12,840		9,400		34,720
Cost of raw materials to be purchased at $2.50 per lb..................................	$31,200		$32,100		$23,500		$86,800

*3,900 pairs (October) × 2 lbs. per pair= 7,800 lbs.;
7,800 lbs. × 20% = 1,560 lbs.

The schedule of expected cash disbursements:

	July	Aug.	Sept.	Quarter
Accounts payable, beginning balance..............................	$11,400			$11,400
July purchases: $31,200 × 60%, 40%..........	18,720	$12,480		31,200
August purchases: $32,100 × 60%, 40%..........		19,260	$12,840	32,100
September purchases: $23,500 × 60%...................			14,100	14,100
Total cash disbursements.......	$30,120	$31,740	$26,940	$88,800

Problem 9-17 (120 minutes)

1. Schedule of expected cash collections:

	April	May	June	Total
Cash sales..........................	$14,000	$17,000	$18,000	$ 49,000
Credit sales.........................	48,000	56,000	68,000	172,000
Total collections...................	$62,000	$73,000	$86,000	$221,000

2. a. Merchandise purchases budget:

	April	May	June	Total
Budgeted cost of goods sold...	$42,000	$51,000	$54,000	$147,000
Add desired ending inventory*	15,300	16,200	9,000	9,000
Total needs...........................	57,300	67,200	63,000	156,000
Less beginning inventory.......	12,600	15,300	16,200	12,600
Required purchases...............	$44,700	$51,900	$46,800	$143,400

^*At April 30: $51,000 × 30% = $15,300.

At June 30: $50,000 July sales × 60% × 30% = $9,000.

b. Schedule of cash disbursements for purchases:

	April	May	June	Total
For March purchases...........	$18,300			$18,300
For April purchases..............	22,350	$22,350		44,700
For May purchases..............		25,950	$25,950	51,900
For June purchases.............			23,400	23,400
Total cash disbursements.....	$40,650	$48,300	$49,350	$138,300

Problem 9-17 (continued)

3. Schedule of cash disbursements for selling and administrative expenses:

	April	May	June	Total
Salaries and wages..................	$ 7,500	$ 7,500	$ 7,500	$22,500
Shipping................................	4,200	5,100	5,400	14,700
Advertising.............................	6,000	6,000	6,000	18,000
Other expenses.......................	2,800	3,400	3,600	9,800
Total cash disbursements for operating expenses...............	$20,500	$22,000	$22,500	$65,000

4. Cash budget:

	April	May	June	Total
Cash balance, beginning..........	$ 9,000	$ 8,350	$ 8,050	$ 9,000
Add cash collections................	62,000	73,000	86,000	221,000
Total cash available...............	71,000	81,350	94,050	230,000
Less disbursements:
For inventory purchases........	40,650	48,300	49,350	138,300
For selling and administrative expenses...........................	20,500	22,000	22,500	65,000
For equipment purchases......	11,500	3,000		14,500
For dividends.......................	0	0	3,500	3,500
Total disbursements.................	72,650	73,300	75,350	221,300
Excess (deficiency) of cash.......	(1,650)	8,050	18,700	8,700
Financing:
Borrowings...........................	10,000			10,000
Repayments.........................			(10,000)	(10,000)
Interest ($10,000 × 1% × 3)..	0	0	(300)	(300)
Total financing........................	10,000	0	(10,300)	(300)
Cash balance, ending..............	$ 8,350	$ 8,050	$ 8,400	$ 8,400

Problem 9-17 (continued)

5. Income Statement:

Nordic Company
Income Statement
For the Quarter Ended June 30
Sales....................................................		$245,000
Cost of goods sold:
Beginning inventory (given).................	$ 12,600
Add purchases (Part 2)........................	143,400
Goods available for sale.......................	156,000
Ending inventory (Part 2).....................	9,000	147,000
Gross margin........................................		98,000
Selling and administrative expenses:
Salaries and wages (Part 3)..................	22,500
Shipping (Part 3)................................	14,700
Advertising (Part 3).............................	18,000
Depreciation.......................................	6,000
Other expenses (Part 3).......................	9,800	71,000
Net operating income.............................		27,000
Less interest expense (Part 4).................		300
Net income...........................................		$ 26,700

Problem 9-17 (continued)

6. Balance sheet:

Nordic Company
Balance Sheet
June 30
Assets
Current assets:
Cash (Part 4)............................................................	$ 8,400
Accounts receivable (80% × $90,000).........................	72,000
Inventory (Part 2).....................................................	9,000
Total current assets.....................................................	89,400
Buildings and equipment, net ($214,100 + $14,500 – $6,000)...................................	222,600
Total assets.................................................................	$312,000

Liabilities and Equity
Current liabilities:
Accounts payable (Part 2: 50% × $46,800)		$ 23,400
Stockholders’ equity:
Capital stock...........................................	$190,000
Retained earnings*.................................	98,600	288,600
Total liabilities and equity............................		$312,000

*	Retained earnings, beginning...............	$ 75,400
	Add net income...................................	26,700
	Total..................................................	102,100
	Less dividends....................................	3,500
	Retained earnings, ending....................	$ 98,600

Problem 9-18 (60 minutes)

1. a. Schedule of expected cash collections:

	Year 2 Quarter
	First	Second	Third	Fourth		Total
Year 1—Fourth quarter sales:
$300,000 × 65%.....................	$195,000					$ 195,000
Year 2—First quarter sales:
$400,000 × 33%.....................	132,000					132,000
$400,000 × 65%.....................		$260,000				260,000
Year 2—Second quarter sales:
$500,000 × 33%.....................		165,000				165,000
$500,000 × 65%.....................			$325,000			325,000
Year 2—Third quarter sales:
$600,000 × 33%.....................			198,000			198,000
$600,000 × 65%.....................				$390,000		390,000
Year 2—Fourth quarter sales:
$480,000 × 33%.....................				158,400		158,400
Total cash collections..................	$327,000	$425,000	$523,000	$548,400		$1,823,400

Problem 9-18 (continued)

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