1. Kayak Co.

budgeted the following cash receipts (excluding cash receipts from loans
received) and cash disbursements (excluding cash disbursements for loan principal and
interest payments) for the first three months of next year.

January
Februar
y
March

Cash

Cash

Receipts
$518,000

Disbursements
$485,000

412,500

358,000

462,000

532,000

According to a credit agreement with the companys bank, Kayak promises to have a minimum
cash balance of $30,000 at each month-end. In return, the bank has agreed that the company can
borrow up to $150,000 at an annual interest rate of 12%, paid on the last day of each month. The
interest is computed based on the beginning balance of the loan for the month. The company
repays principal on the loan with available cash on the last day of each month. The company has
a cash balance of $30,000 and a loan balance of $60,000 at January 1.

Prepare monthly cash budgets for each of the first three months of next year. (Amounts to be
deducted should be indicated by a minus sign.)

2. Walker Company prepares monthly budgets. The current budget plans for a September
ending inventory of 38,000 units. Company policy is to end each month with
merchandise inventory equal to a specified percent of budgeted sales for the following
month. Budgeted sales and merchandise purchases for the next three months follow.

July
August
September

Sales (Units)
160,000
330,000
300,000

Purchases (Units)
194,000
324,000
278,000

3. Use the following information to prepare the July cash budget for Acco Co. It should
show expected cash receipts and cash disbursements for the month and the cash balance
expected on July 31.

a. Beginning cash balance on July 1: $64,000.

b.
Cash receipts from sales: 35% is collected in the month of sale, 50% in the next month, and
15% in the second month after sale (uncollectible accounts are negligible and can be
ignored). Sales amounts are: May (actual), $1,750,000; June (actual), $1,480,000; and July
(budgeted), $1,540,000.
c.
Payments on merchandise purchases: 90% in the month of purchase and 10% in the month
following purchase. Purchases amounts are: June (actual), $570,000; and July (budgeted),
$450,000.
d. Budgeted cash disbursements for salaries in July: $220,000.
e. Budgeted depreciation expense for July: $15,000.
f. Other cash expenses budgeted for July: $110,000.
g. Accrued income taxes due in July: $90,000.
h. Bank loan interest due in July: $8,500
1.
Calculation of cash receipts from sales collected in May, June, July, July 31
Accounts Rec.
2.
Calculation of cash payments for merchandise paid in June, July, July 31
Accounts Rec

4. Following information relates to Acco Co.

a. Beginning cash balance on July 1: $40,000.

b.
Cash receipts from sales: 30% is collected in the month of sale, 50% in the next month, and
20% in the second month after sale (uncollectible accounts are negligible and can be
ignored). Sales amounts are: May (actual), $1,376,000; June (actual), $960,000; and July
(budgeted), $1,120,000.
c.
Payments on merchandise purchases: 60% in the month of purchase and 40% in the month
following purchase. Purchases amounts are: June (actual), $344,000; and July (budgeted),
$600,000.
d. Budgeted cash disbursements for salaries in July: $168,800.
e. Budgeted depreciation expense for July: $9,600.
f. Other cash expenses budgeted for July: $120,000.
g. Accrued income taxes due in July: $80,000 (related to June).
h. Bank loan interest paid July 31: $5,280.
Additional Information:
a. Cost of goods sold is 44% of sales.
b. Inventory at the end of June is $64,000 and at the end of July is $171,200.
c. Salaries payable on June 30 are $40,000 and are expected to be $32,000 on July 31.
d.
The equipment account balance is $1,280,000 on July 31. On June 30, the accumulated
depreciation on equipment is $224,000.
e.
The $5,280 cash payment of interest represents the 1% monthly expense on a bank loan of
$528,000.
f.
Income taxes payable on July 31 are $99,456, and the income tax rate applicable to the
company is 30%.
g.
The only other balance sheet accounts are: Common Stock, with a balance of $464,000 on
June 30; and Retained Earnings, with a balance of $857,600 on June 30.

Prepare a budgeted income statement for the month of July and a budgeted balance sheet for
July 31.

5. Tempo Company's fixed budget for the first quarter of calendar year 2013 reveals the
following.

Sales (12,000
units)
Cost of goods
sold
Direct
materials
Direct labor
Production
supplies
Plant
manager salary
Gross profit
Selling
expenses
Sales
commissions
Packaging
Advertising
Administrative
expenses
Administrat
ive salaries
Depreciatio
noffice equip.
Insurance
Office rent
Income from
operations

2,424,000

276,600
515,280
318,360
76,600

1,186,840
1,237,160

105,600
184,080
100,000

389,680

126,600
96,600
66,600
76,600

366,400
$

481,080

Prepare flexible budgets that show variable costs per unit, fixed costs, and three different flexible
budgets for sales volumes of 10,000, 12,000, and 14,000 units. (Round cost per unit to 2
decimal places.)

6. Solitaire Companys fixed budget performance report for June follows. The $615,000
budgeted expenses include $578,100 variable expenses and $36,900 fixed expenses.
Actual expenses include $48,900 fixed expenses.

Fixed Budget
Sales
(in
units)
Sales
(in
dollars
)
Total
expens
es
Inco
me
from
operati
ons

Actual Results

Variances

8,200

10,600

$ 820,000

$1,060,000

$ 240,000
F

615,000

738,000

123,000
U

$ 205,000

$ 322,000

$ 117,000
F

Prepare a flexible budget performance report showing any variances between budgeted and
actual results. List fixed and variable expenses separately. (Do not round intermediate
calculations.)

7. Bay City Companys fixed budget performance report for July follows. The $587,000
budgeted expenses include $400,000 variable expenses and $187,000 fixed expenses.
Actual expenses include $177,000 fixed expenses.
Fixed Budget
Sales
(in
units)
Sales
(in
dollars
)
Total
expens
es
Inco
me
from
operati
ons

Actual Results

8,000

6,900

$ 640,000

$ 607,200

587,000

551,000

53,000

56,200

Variances

32,800
U
36,000
F

3,200
U

Prepare a flexible budget performance report that shows any variances between budgeted results
and actual results. List fixed and variable expenses separately. (Do not round intermediate
calculations.)