Rogers Corporation is preparing
its cash budget for July. The budgeted beginning cash balance is $25,000.
Budgeted cash receipts total $141,000 and budgeted cash disbursements total
$139,000. The desired ending cash balance is $30,000.
101. The
excess (deficiency) of cash available over disbursements for July is:
A) $23,000
B) $2,000
C) $166,000
D) $27,000
Ans: D AACSB: Analytic
AICPA BB: Critical Thinking AICPA FN: Reporting LO: 8 Level: Easy
Solution:
Excess cash available over
disbursements = Beginning cash balance + Budgeted cash receipts - Budgeted cash
disbursements
= $25,000 + $141,000 - $139,000 =
$27,000
102. To
attain its desired ending cash balance for July, the company should borrow:
A) $30,000
B) $0
C) $3,000
D) $57,000
Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 8 Level: Easy
Solution:
Excess cash available over
disbursements = Beginning cash balance + Budgeted cash receipts - Budgeted cash
disbursements = $25,000 + $141,000 − $139,000 = $27,000
Borrowing = Desired ending cash
balance − Excess cash available over disbursements = $30,000 − $27,000 = $3,000
Use the following to answer
questions 103-104:
Bries Corporation is preparing
its cash budget for January. The budgeted beginning cash balance is $18,000.
Budgeted cash receipts total $183,000 and budgeted cash disbursements total
$188,000. The desired ending cash balance is $30,000.
103. The
excess (deficiency) of cash available over disbursements for January is:
A) $23,000
B) $13,000
C) ($5,000)
D) $201,000
Ans: B AACSB: Analytic
AICPA BB: Critical Thinking AICPA FN: Reporting LO: 8 Level: Easy
Solution:
Excess cash available over
disbursements = Beginning cash balance + Budgeted cash receipts − Budgeted cash
disbursements = $18,000 + $183,000 − $188,000 = $13,000
104. To
attain its desired ending cash balance for January, the company should borrow:
A) $17,000
B) $0
C) $30,000
D) $43,000
Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 8 Level: Easy
Solution:
Excess cash available over
disbursements = Beginning cash balance + Budgeted cash receipts − Budgeted cash
disbursements = $18,000 + $183,000 − $188,000 = $13,000
Borrowing = Desired ending cash
balance − Excess cash available over disbursements = $30,000 − $13,000 =
$17,000
Use the following to answer
questions 105-106:
Muecke Inc. is working on its
cash budget for April. The budgeted beginning cash balance is $40,000. Budgeted
cash receipts total $150,000 and budgeted cash disbursements total $158,000.
The desired ending cash balance is $50,000.
105. The
excess (deficiency) of cash available over disbursements for April will be:
A) $32,000
B) $190,000
C) $48,000
D) ($8,000)
Ans: A AACSB: Analytic
AICPA BB: Critical Thinking AICPA FN: Reporting LO: 8 Level: Easy
Solution:
Excess cash available over
disbursements = Beginning cash balance + Budgeted cash receipts − Budgeted cash
disbursements = $40,000 + $150,000 − $158,000 = $32,000
106. To
attain its desired ending cash balance for April, the company needs to borrow:
A) $18,000
B) $0
C) $50,000
D) $82,000
Ans: A AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 8 Level: Easy
Solution:
Excess cash available over
disbursements = Beginning cash balance + Budgeted cash receipts - Budgeted cash
disbursements = $40,000 + $150,000 - $158,000 = $32,000
Borrowing = Desired ending cash
balance − Excess cash available over disbursements = $50,000 − $32,000 =
$18,000
Use the following to answer
questions 107-108:
Varughese Inc. is working on
its cash budget for March. The budgeted beginning cash balance is $33,000.
Budgeted cash receipts total $182,000 and budgeted cash disbursements total
$191,000. The desired ending cash balance is $40,000.
107. The
excess (deficiency) of cash available over disbursements for March will be:
A) $215,000
B) $42,000
C) $24,000
D) ($9,000)
Ans: C AACSB: Analytic
AICPA BB: Critical Thinking AICPA FN: Reporting LO: 8 Level: Easy
Solution:
Excess cash available over
disbursements = Beginning cash balance + Budgeted cash receipts − Budgeted cash
disbursements = $33,000 + $182,000 − $191,000 = $24,000
108. To
attain its desired ending cash balance for March, the company needs to borrow:
A) $40,000
B) $0
C) $16,000
D) $64,000
Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 8 Level: Easy
Solution:
Excess cash available over
disbursements = Beginning cash balance + Budgeted cash receipts − Budgeted cash
disbursements = $33,000 + $182,000 − $191,000 = $24,000
Borrowing = Desired ending cash
balance − Excess cash available over disbursements = $40,000 − $24,000 =
$16,000
Use the following to answer
questions 109-113:
Carver Lumber sells lumber and
general building supplies to building contractors in a medium-sized town in
Montana. Data regarding the store's operations follow:
·
Sales are budgeted at
$350,000 for November, $320,000 for December, and $300,000 for January.
·
Collections are expected to
be 90% in the month of sale, 8% in the month following the sale, and 2%
uncollectible.
·
The cost of goods sold is
75% of sales.
·
The company purchases 60%
of its merchandise in the month prior to the month of sale and 40% in the month
of sale. Payment for merchandise is made in the month following the purchase.
·
Other monthly expenses to
be paid in cash are $24,700.
·
Monthly depreciation is
$16,000.
·
Ignore taxes.
|
|
Statement
of Financial Position
|
|
|
|
October
31
|
|
|
|
Assets:
|
|
|
|
Cash..................................................................................................
|
$ 19,000
|
|
|
Accounts receivable (net of allowance for uncollectible
accounts).
|
77,000
|
|
|
Inventory..........................................................................................
|
157,500
|
|
|
Property, plant and equipment (net of $502,000
accumulated depreciation).................................................................................
|
1,002,000
|
|
|
Total assets.......................................................................................
|
$1,255,500
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity:
|
|
|
|
Accounts payable.............................................................................
|
$ 272,000
|
|
|
Common stock.................................................................................
|
780,000
|
|
|
Retained earnings.............................................................................
|
203,500
|
|
|
Total liabilities and stockholders’ equity.........................................
|
$1,255,500
|
109. The
net income for December would be:
A) $32,900
B) $42,300
C) $39,300
D) $55,300
Ans: A AACSB: Analytic
AICPA BB: Critical Thinking AICPA FN: Reporting LO: 9 Level: Hard
Solution:
|
|
Net sales [$320,000 × (100% − 2%)].......................
|
$313,600
|
|
|
Cost of goods sold ($320,000 × 75%)......................
|
240,000
|
|
|
Gross margin............................................................
|
73,600
|
|
|
Depreciation expense...............................................
|
16,000
|
|
|
Selling and administrative expense..........................
|
24,700
|
|
|
Net income...............................................................
|
$ 32,900
|
110. The
cash balance at the end of December would be:
A) $19,000
B) $156,600
C) $61,300
D) $137,600
Ans: B AACSB: Analytic
AICPA BB: Critical Thinking AICPA FN: Reporting LO: 10 Level: Hard
Solution:
|
|
|
November
|
December
|
|
|
October Accounts Receivable Balance ..........................................
|
$ 77,000
|
|
|
|
Collection of November Sales...........
|
|
|
|
|
$350,000 × 90%..............................
|
315,000
|
|
|
|
$350,000 × 8%................................
|
|
$ 28,000
|
|
|
Collection of December Sales............
|
|
|
|
|
$320,000 × 90%..............................
|
|
288,000
|
|
|
October Accounts Payable Balance...
|
(272,000)
|
|
|
|
Payment for November Purchases.....
|
|
|
|
|
($350,000 × 75%) × 40%................
|
|
(105,000)
|
|
|
($320,000 ×
75%) × 60%................
|
|
(144,000)
|
|
|
Other cash monthly expenses.............
|
(24,700)
|
(24,700)
|
|
|
Net cash inflow(outflow) per month..
|
$ 95,300
|
$ 42,300
|
|
|
Beginning cash balance, October 31........................
|
$ 19,000
|
|
|
Add November net cash inflow................................
|
95,300
|
|
|
Add December net cash inflow................................
|
42,300
|
|
|
Ending cash balance, December 31.........................
|
$156,600
|
111. The
accounts receivable balance, net of uncollectible accounts, at the end of
December would be:
A) $53,600
B) $83,400
C) $25,600
D) $32,000
Ans: C AACSB: Analytic
AICPA BB: Critical Thinking AICPA FN: Reporting LO: 10 Level: Hard
Solution:
112. Accounts
payable at the end of December would be:
A) $231,000
B) $96,000
C) $135,000
D) $240,000
Ans: A AACSB: Analytic
AICPA BB: Critical Thinking AICPA FN: Reporting LO: 10 Level: Hard
Solution:
|
|
|
Sales
|
Cost
of Goods Sold
|
|
|
November...........................................
|
$350,000
|
$262,500
|
|
|
December............................................
|
$320,000
|
$240,000
|
|
|
January................................................
|
$300,000
|
$225,000
|
Purchases in December = ($225,000 ×
60%) + ($240,000 × 40%)
= $135,000 + $96,000 = $231,000
113. Retained
earnings at the end of December would be:
A) $289,600
B) $276,200
C) $236,400
D) $203,500
Ans: B AACSB: Analytic
AICPA BB: Critical Thinking AICPA FN: Reporting LO: 10 Level: Hard
Solution:
|
|
Net income calculation for November:
|
|
|
|
Net sales ($350,000 × 98%).....................................
|
$343,000
|
|
|
Less cost of goods sold ($350,000 × 75%)..............
|
262,500
|
|
|
Gross margin............................................................
|
80,500
|
|
|
Less depreciation expense........................................
|
16,000
|
|
|
Less selling and administrative expense..................
|
24,700
|
|
|
Net income...............................................................
|
$ 39,800
|
|
|
Net income calculation for December:
|
|
|
|
Net sales [$320,000 × (100% − 2%)].......................
|
$313,600
|
|
|
Less cost of goods sold ($320,000 × 75%)..............
|
240,000
|
|
|
Gross margin............................................................
|
73,600
|
|
|
Less depreciation expense........................................
|
16,000
|
|
|
Less selling and administrative expense..................
|
24,700
|
|
|
Net income...............................................................
|
$ 32,900
|
Retained earnings in December =
Retained earnings in October + Net income in November + Net income in December
= $203,500 + $39,800 + $32,900 = $276,200
