ACCOUNTING-Given Data CRAVAT SALES COMPANY

Given Data

CRAVAT SALES COMPANY

CRAVAT SALES COMPANY

Minimum ending cash
balance

$ 10,000

Budgets

Selling price (per unit)

$ 8.10

April
May
June
Quarter

Recent and forecast sales
(in units):

1a.
Sales budget:

January (actual)

20,000

Budgeted
sales in units

33,000
41,000
65,000
139,000

February (actual)

24,000

Selling
price per unit

$ 8.10
$ 8.10
$ 8.10
$ 8.10

March (actual)

28,000

Total sales

$ 267,300
$ 332,100
$ 526,500
$ 1,125,900

April

33,000

Correct!
Correct!
Correct!

May

41,000

1b.
Schedule of expected cash collections:

June

65,000

February
sales

$ 19,440

$ 19,440

July

40,000

March sales

136,080
22,680

$ 158,760

August

36,000

April sales

80,190

160,380
$ 26,730
$ 267,300

September

32,000

May sales

99,630
199,260
$ 298,890

June sales

157,950
$
157,950

Desired ending
inventories (percentage

75%

Total
cash collections

$ 235,710
$ 282,690
$ 383,940
$ 902,340

of next month’s sales)

Correct!
Correct!
Correct!
Correct!

Cost of ties (per unit)

$ 4.85

1c.
Merchandise purchases budget:

Budgeted
sales in units

33,000
41,000
65,000
139,000

Purchases paid as
follows:

Add
budgeted ending inventory

30,750
48,750
30,000
30,000

In month of purchase

50%

Total needs

63,750
89,750
95,000
169,000

In following month

50%

Less
beginning inventory

24,750
30,750
48,750
24,750

Required
unit purchases

39,000
59,000
46,250
144,250

Collection on sales:

Unit cost

$ 4.85
$ 4.85
$ 4.85
$ 4.85

Sales collected current month

30%

Required
dollar purchases

$ 189,150.00
$ 286,150.00
$ 224,312.50
$ 699,612.50

Sales collected following month

60%

Correct!
Correct!
Correct!
Correct!

Sales collected 2nd month following

10%

1d.
Budgeted cash disbursements for inventory purchases:

March
purchases

$ 76,993.75

$ 76,994

Variable monthly
expenses:

April
purchases

94,575
$ 94,575

$ 189,150

Sales commissions (per tie)

$ 1.00

May
purchases

143,075
$ 143,075
$ 286,150

June
purchases

112,156.25
112,156.25

Fixed monthly expenses:

Total
cash payments

$ 171,568.75
$ 237,650
255,231.25
664,450.00

Wages and salaries

$ 22,000

Correct!
Correct!
Correct!
Correct!

Utilities

$ 14,000

Insurance

$ 1,200

2.

Depreciation

$ 1,500

CRAVAT SALES COMPANY

Miscellaneous

$ 3,000

Cash Budget

For the Three Months
Ending June 30

Land purchased in May

$ 30,000

Dividends declared each
quarter

$ 12,000

April
May
June
Quarter

Cash
balance, beginning

$ 14,000
$ 12,141.25
$ 12,181.25
$ 38,323

Balance sheet at March
31:

Add
receipts from customers

235,710
282,690
383,940
902,340

Assets

Total
cash available

249,710
294,831
396,121
940,663

Cash

$ 14,000

Less
disbursements:

Accounts receivable

Purchase of inventory

171,568.75
237,650.00
255,231.25
664,450

February sales

$ 19,440

Sales commissions

33,000
41,000
65,000
139,000

March sales

158,760
178,200

Salaries and wages

22,000
22,000
22,000
66,000

Inventory (24,750 units)

120,037.50

Utilities

14,000
14,000
14,000
42,000

Prepaid insurance

14,400

Miscellaneous

3,000
3,000
3,000
9,000

Fixed assets, net of
depreciation

172,700

Dividends paid

4,000
4,000
4,000
12,000

Total assets

$ 499,337.50

Land purchases


30,000

30,000

Total
disbursements

247,568.75
351,650.00
363,231.25
962,450

Liabilities and Stockholders’ Equity

Excess
(deficiency) of receipts

Accounts payable

$76,993.75

over disbursements

2,141.25
(56,818.75)
32,890.00
(21,788)

Dividends payable

12,000

Financing:

Capital stock

300,000

Borrowings

10,000
69,000

79,000

Retained earnings

110,343.75

Repayments



22,000
22,000

Total liabilities and
stockholders’ equity

$ 499,337.50

Interest



(1,680)
(1,680)

Total
financing

10,000
69,000
20,320
55,320

Agreement with Bank:

Cash
balance, ending

$ 12,141.25
$ 12,181.25
$ 12,570.00
$ 12,570

Borrowing increments

$ 1,000

Correct!
Correct!
Try again!
Try again!

Maximum borrowing amount

$300,000

Interest rate per month

1%

3.

Repayment increments

$ 1,000

CRAVAT SALES COMPANY

Total of interest paid
each quarter

100%

Budgeted Income
Statement

Required minimum cash
balance

$ 12,000

For the Three Months
Ended June 30

Sales
in units

139,000

Sales

$ 1,125,900

Variable
expenses:

Cost of goods sold

$ 699,613

Commissions

139,000
838,613

Contribution
margin

287,288

Fixed
expenses:

Salaries and wages

66,000

Utilities

42,000

Insurance expired

3,600

Depreciation

4,500

Miscellaneous

9,000
125,100

Net
operating income

162,188

Less
interest expense

(1,680)

Net income

$ 163,868

Try again!

4.

CRAVAT SALES COMPANY

Budgeted Balance
Sheet

June 30

Assets

Cash

Accounts
receivable

24,750

Inventory

30,000

Unexpired
insurance

Fixed
assets, net of depreciation

1,500

Total assets

Liabilities and
Stockholders’ Equity

Accounts
payable, purchases

$76,933.75

Dividends
payable

12,000

Loans
payable, bank

79,000

Capital
stock, no par

300,000

Retained
earnings

Total
liabilities and equity

Accounts
receivable at June 30:

May sales

$ 332,100

June sales

526,500

Total

Retained
earnings at June 30:

Balance, March 31

Add net income

Total

Less dividends declared

Balance, June 30

 

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