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14-2. Camtech, which expects to start operations o...

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14-2. Camtech, which expects to start operations on January 1, 2008 will sel digital cameras in shopping malls, Camtech has budgeted sales as indicated in the following table. The company expects a 10 percent increase in sales per month for February and March. The ratio of cash sales to sales on account will remain stable from January through March. Sales January February March Cash Sales $50,000 ? ? Sales on account 80, 000 ? ? Total Budgeted sales $130,000 ? ? a. Complete the sales budget by filling in the missing amounts b. Determine the amount of sales revenue Camtech will report on its second quarter pro forma income statement. 14-7. Tucker Lighting Company sells lamps and other lighting fixtures. The purchasing department manager prepared the following inventory purchases budget. Tucker Lighting?s policy is to maintain an ending inventory balance equal to 10 percent of the following month?s cost of goods sold. April?s budgeted cost of goods sold is $85,000. January February March Budgeted cost of goods sold $70,000 $74,000 $80,000 Plus: Desired ending inventory $7,400 ? ? Inventory needed $77,400 ? ? Less: Beginning inventory $18, 000 ? ? Required purchases (on account) $59,400 ? ? a. Complete the inventory purchases budget b filling in the missing amounts b. Determine the amount of cost of goods sold the company will report on its first quarter pro forma income statement. c. Determine the amount of ending inventory the company will report on its pro forma balance sheet at the end of the first quarter. 14-13. The accountant for Lori?s Dress Shop prepared the following cash budget. Lori?s desires to maintain a cash cushion of $14,000 at the end of each month. Funds are assumed to the borrowed and repaid on the last day of each month. Interest is charged at the rate of 2 percent per month. Cash Budget July August September Section 1: Cash receipts Beginning cash balance $43,000 $ ? $ ? Add cash receipts $183,000 196,000 240,200 Total Cash available (a) 226, 000 ? ? Section 2 Cash payments For inventory purchases 163,646 139,900 172,474 S&A expenses 54,000 62,060 61,536 For interest expense 0 ? ? Total budgeted disbursements (b) 217,646 ? ? Section 3: Financing activities Surplus (shortage) $8,354 ? ? Borrowing (repayments) (c) $5,646 ? ? Ending Cash Balance (a + b + c) $14,000 $14,000 $14,000 a. Complete the cash budget by filling in the missing amounts. Round all computations to the nearest whole dollar. b. Determine the amount of net cash follows form operating activities Lori?s will report on the third quarter pro forma statement of cash flows. c. Determine the amount of net cash flows from financing activities Lori?s will report on the pro forma statement of cash flows. 14-15. Jim Denty, the controller of Grime Corporation, is trying to prepare a sales budget for the coming year. The income statements for the last four quarter follow. First Quarter Second Q. Third Q. Fourth Q. Total Sales revenue $170,000 $200,000 $210,000 $260,000 $840,000 Cost of goods sold 102,000 120,000 126,000 156,000 504,000 Gross Profit 68,000 80,000 84,000 104,000 336,000 Selling & admin, expense 17,000 20,000 21,000 26,000 84,000 Net Income $51,000 $60,000 $63,000 $78,000 $252,000 Historically, cost of goods sold is about 60 percent of sales revenue. Selling and administrative expenses are about 10 percent of sales revenue. Gene Moreno the chief executive officer told Mr. Denty that he expected sales next year to be 10 percent above last year?s level. However, Sarah Toole, the vice president of sales, told Mr. Denty that the believed sales growth would be only 5 percent. a. Prepare a pro forma income statement including quarterly budges for the coming year using Mr. Moreno?s estimate. b. Prepare a pro forma income statement including quarterly budgets for the coming year using Ms. Toole?s estimate. c. Explain why two executive officers in the same company could have different estimates of future growth.

 

Paper#4462 | Written in 18-Jul-2015

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