Managerial Accounting: Creating Value in a Dynamic Business Environment
12th Edition
ISBN: 9781260417074
Author: HILTON, Ronald
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 9, Problem 33P
Mary and Kay, Inc., a distributor of cosmetics throughout Florida, is in the process of assembling a
- All sales are on account. Sixty percent of customer accounts are collected in the month of sale; 35 percent are collected in the following month. Uncollectibles amounting to 5 percent of sales are anticipated, and management believes that only 20 percent of the accounts outstanding on December 31, 20x0, will be recovered and that the recovery will be in January 20x1.
- Seventy percent of the merchandise purchases are paid for in the month of purchase; the remaining 30 percent are paid for in the month after acquisition.
- The December 31, 20x0, balance sheet disclosed the following selected figures: cash, $20,000; accounts receivable, $55,000; and accounts payable, $22,000.
- Mary and Kay, Inc. maintains a $20,000 minimum cash balance at all times. Financing is available (and retired) in $1,000 multiples at an 8 percent interest rate, with borrowings taking place at the beginning of the month and repayments occurring at the end of the month. Interest is paid at the time of repaying principal and computed on the portion of principal repaid at that time.
- Additional data:
Required:
- 1. Prepare a schedule that discloses the firm’s total cash collections for January through March.
- 2. Prepare a schedule that discloses the firm’s total cash disbursements for January through March.
- 3. Prepare a schedule that summarizes the firm’s financing cash flows for January through March. The schedule should present the following information in the order cited: Beginning cash balance, total receipts (from requirement (1)), total payments (from requirement (2)), the cash excess (deficiency) before financing, borrowing needed to maintain minimum balance, loan principal repaid, loan interest paid, and ending cash balance.
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Mary and Kay, Inc., a distributor of cosmetics throughout Florida, is in the process of assembling a cash budget for the first quarter of
20x1. The following information has been extracted from the company's accounting records:
• All sales are on account. Sixty percent of customer accounts are collected in the month of sale; 30 percent are collected in the
following month. Uncollectibles amounting to 10 percent of sales are anticipated, and management believes that only 20 percent of
the accounts outstanding on December 31, 20x0, will be recovered and that the recovery will be in January 20x1.
• Sixty percent of the merchandise purchases are paid for in the month of purchase; the remaining 40 percent are paid for in the
month after acquisition.
• The December 31, 20x0, balance sheet disclosed the following selected figures: cash, $75,000; accounts receivable, $240,000; and
accounts payable, $81,000.
• Mary and Kay, Inc., maintains a $75,000 minimum cash balance at all times. Financing…
Mary and Kay, Inc., a distributor of cosmetics throughout Florida, is in the process of assembling a cash budget for the first quarter of 20x1. The following information has been extracted from the company’s accounting records: •All sales are on account. Sixty percent of customer accounts are collected in the month of sale; 35 percent are collected in the following month. Uncollectibles amounting to 5 percent of sales are anticipated, and management believes that only 20 percent of the accounts outstanding on December 31, 20x0, will be recovered and that the recovery will be in January 20x1. •Seventy percent of the merchandise purchases are paid for in the month of purchase; the remaining 30 percent are paid for in the month after acquisition. •The December 31, 20x0, balance sheet disclosed the following selected figures: cash, $20,000; accounts receivable, $55,000; and accounts payable, $22,000. •Mary and Kay, Inc., maintains a $20,000 minimum cash balance at…
The Hubbard Corporation is a distributor of hair care products and is ready to start the third quarter, in which its peak sales occur. The company has requested a $100,000, 90-day loan from its bank to help them meet their cash requirements for the third quarter. Since Hubbard Corporation has experienced difficulty in paying off their loans in previous years, the loan officer has requested the company prepare a cash budget for the third quarter.
The following data has been gathered by the staff.
On July 1, 2021, the beginning of the third quarter, the company will have a cash balance of $75,000.
Actual sales for the last 2 months and budgeted sales for the third quarter (all sales are on account).
Month
Amount in Dollars ($)
May (actual)
500,000
June (actual)
480,000
July (budgeted)
520,000
August (budgeted)
550,000
September (budgeted)
600,000
Past experience shows that 30% of a month's sales are collected in the month of sale, 60% in the month…
Chapter 9 Solutions
Managerial Accounting: Creating Value in a Dynamic Business Environment
Ch. 9 - Explain how a budget facilitates communication and...Ch. 9 - Prob. 2RQCh. 9 - Prob. 3RQCh. 9 - Prob. 4RQCh. 9 - Prob. 5RQCh. 9 - What is meant by the term operational budgets?...Ch. 9 - How does activity-based budgeting explain the...Ch. 9 - Prob. 8RQCh. 9 - Give three examples of how the City of Boston...Ch. 9 - Describe the role of a budget director.
Ch. 9 - What is the purpose of a budget manual?Ch. 9 - Prob. 12RQCh. 9 - Prob. 13RQCh. 9 - Define the term budgetary slack, and briefly...Ch. 9 - How can an organization help to reduce the...Ch. 9 - Prob. 16RQCh. 9 - Discuss this comment by a small-town bank...Ch. 9 - List the steps you would go through in developing...Ch. 9 - Prob. 19RQCh. 9 - Prob. 20RQCh. 9 - Fill in the missing amounts in the following...Ch. 9 - Bodin Company budgets on an annual basis. The...Ch. 9 - Coyote Loco, Inc., a distributor of salsa, has the...Ch. 9 - Greener Grass Fertilizer Company plans to sell...Ch. 9 - The following information is from Tejas...Ch. 9 - Tanya Williams is the new accounts manager at East...Ch. 9 - Sound Investments, Inc. is a large retailer of...Ch. 9 - Handy Hardware is a retail hardware store....Ch. 9 - Prob. 30ECh. 9 - Spiffy Shades Corporation manufactures artistic...Ch. 9 - Western State University (WSU) is preparing its...Ch. 9 - Mary and Kay, Inc., a distributor of cosmetics...Ch. 9 - Prob. 34PCh. 9 - Alpha-Tech, a rapidly growing distributor of...Ch. 9 - Prob. 36PCh. 9 - Scholastic Furniture, Inc. manufactures a variety...Ch. 9 - Prob. 38PCh. 9 - Vista Electronics, Inc. manufactures two different...Ch. 9 - Prob. 40PCh. 9 - Toronto Business Associates, a division of Maple...Ch. 9 - FreshPak Corporation manufactures two types of...Ch. 9 - Healthful Foods Inc., a manufacturer of breakfast...Ch. 9 - We really need to get this new material-handling...Ch. 9 - City Racquetball Club (CRC) offers racquetball and...Ch. 9 - Patricia Eklund, controller in the division of...Ch. 9 - Jeffrey Vaughn, president of Frame-It Company, was...
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