The selling and administrative expense budget of Garney Corporation is based on the number of units sold, which are budgeted to be 1,800 units in October. The variable selling and administrative expense is $2.00 per unit. The budgeted fixed selling and administrative expense is $22,680 per month, which includes depreciation of $7,020. The remainder of the fixed selling and administrative expense represents current cash flows.

126. The selling and administrative expense budget of Garney Corporation is based on the number of units sold, which are budgeted to be 1,800 units in October. The variable selling and administrative expense is $2.00 per unit. The budgeted fixed selling and administrative expense is $22,680 per month, which includes depreciation of $7,020. The remainder of the fixed selling and administrative expense represents current cash flows.

           

            Required:

           

            Prepare the selling and administrative expense budget for October.

            Ans: 

	October
Budgeted unit sales....................................................................	1,800
Variable selling and administrative expense per unit................	$2.00
Budgeted variable expense.........................................................	$ 3,600
Budgeted fixed selling and administrative expense...................	22,680
Total budgeted selling and administrative expense...................	26,280
Less depreciation........................................................................	7,020
Cash disbursements for selling and administrative expenses....	$19,260

            AACSB:  Analytic     AICPA BB:  Critical Thinking     AICPA FN:  Reporting, Measurement     LO:  7     Level:  Easy

    127. Romeiro Corporation is preparing its cash budget for September. The budgeted beginning cash balance is $46,000. Budgeted cash receipts total $160,000 and budgeted cash disbursements total $152,000. The desired ending cash balance is $70,000. The company can borrow up to $120,000 at any time from a local bank, with interest not due until the following month.

           

            Required:

           

            Prepare the company's cash budget for September in good form.

            Ans: 

           

Cash balance, beginning...........................................................	$ 46,000
Add cash receipts.....................................................................	160,000
Total cash available..................................................................	206,000
Less cash disbursements..........................................................	152,000
Excess (deficiency) of cash available over disbursements......	54,000
Borrowings...............................................................................	16,000
Cash balance, ending................................................................	$ 70,000

            AACSB:  Analytic     AICPA BB:  Critical Thinking     AICPA FN:  Reporting, Measurement     LO:  8     Level:  Easy

    128. Zolezzi Inc. is preparing its cash budget for March. The budgeted beginning cash balance is $42,000. Budgeted cash receipts total $178,000 and budgeted cash disbursements total $175,000. The desired ending cash balance is $50,000. The company can borrow up to $160,000 at any time from a local bank, with interest not due until the following month.

           

            Required:

           

            Prepare the company's cash budget for March in good form. Make sure to indicate what borrowing, if any, would be needed to attain the desired ending cash balance.

            Ans: 

Cash balance, beginning........................................................	$ 42,000
Add cash receipts...................................................................	178,000
Total cash available...............................................................	220,000
Less cash disbursements........................................................	175,000
Excess (deficiency) of cash available over disbursements....	45,000
Borrowings............................................................................	5,000
Cash balance, ending.............................................................	$ 50,000

            AACSB:  Analytic     AICPA BB:  Critical Thinking     AICPA FN:  Reporting, Measurement     LO:  8     Level:  Easy