Shiela Mae Ponan

BSA 23
Assignment – Budget
1. Hicks Company has the following sales projections for 20X4:

January $160,000 March 175,000May 195,000

February 168,000April 180,000June 190,000

Hicks collects 30% of its sales in the month of sale, 45% in the month following the sale, and 24% in the second
month following the sale. Records show that sales were $160,000 in November and $168,000 in December
20X3.

a. Prepare a schedule of cash receipts for the first three months of 20X4.
Solution:

January Collection:(24% x 160,000) $38,400

(45% x 168,000) $75,600
(30% x 160,000) $48,000
$162,000

February Collection:(24% x 168,000) $40,320

(45% x 160,000) $72,000
(30% x 168,000) $50,400
$162,720

March Collection:(24% x 160,000) $38,400

(45% x 168,000) $75,600
(30% x 175,000) $52,500
$166,500

b. What would be the accounts receivable balance (net of bad debts) on March 31, 20X4?
Solution:

February sales (168,000 x 24%) $40,320

March sales (175,000 x [45%+24%]) $120,750
$161,070

2. Weasel Company has the following sales projections for 20X3:

January $200,000
February 210,000
March 225,000
April 230,000
May 245,000
June 240,000

Weasel collects 40% of its sales in the month of sale, 45% in the month following the sale and 13% in the
second month following the sale. Records show that sales were $225,000 in November and $208,000 in
December 20X2.

a. Prepare a schedule of cash receipts for the first three months of 20X3.
Solution:

January Collections:(13% x 225,000) $29,250

(45% x 208,000) $93,600
 (40% x 200,000) $80,000
$202,850

February Collections:(13% x 208,000) $27,040

(45% x 200,000) $90,000
(40% x 210,000) $84,000
$201,040

March Collections: (13% x 200,000) $26,000

(45% x 210,000) $94,500
(40% x 225,000) $90,000
$210,500

b. What would be the accounts receivable (net of bad debts) balance on March 31, 20X3?
Solution:

February Sales (210,000 x 13%) $27,300

March Sales (225,000 x [45%+13%]) $130,500
$157,800

3. Amcar Inc. estimates its units sales for the coming months to be as follows:

March 280,000
April 260,000
May 250,000
June 230,000
July 240,000
August 225,000

Amcar maintains inventory at budgeted sales needs for the next month. March 1 inventory will be 248,000 units.

a. Prepare a monthly purchasing schedule for March through July.

Solution:

March Purchases (280,000 + 260,000 – 248,000) 292,000 units

April Purchases (260,000 + 250,000 – 260,000) 250,000 units
May Purchases (250,000 + 230,000 – 250,000) 230,000 units
June Purchases (230,000 + 240,000 – 230,000) 240,000 units
July Purchases (240,000 + 225,000 – 240,000) 225,000 units

4. Acme Inc. estimates its dollar sales for the coming months to be as follows.

June $340,000
July 360,000
August 300,000
September 260,000
October 240,000
November 200,000

Acme has an average gross margin of 40% of sales and maintains inventory at 75% of budgeted sales needs for the
next month. Acme began June with $150,000 in inventory.

a. Prepare a monthly purchasing schedule (in $) for as many months as is possible.

Solution:

June July August September October SALES

$340,000 $360,000 $300,000 $260,000 $240,000
X40% X0.40 X0.40 X0.40 X0.40 X0.40
COST OF SALES $136,000 $144,000 $120,000 $104,000 $96,000
+ End,Inv. $108,000 $90,000 $78,000 $72,000 $60,000
- Beg,Inv. ($150,000) ($108,000) (90,000) (78,000) (72,000) PURCHASES $94,000
$126,000 $108,000 $98,000 $84,000