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Exam 22: Master Budgets and Planning

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Question 31

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The budgeted balance sheet is prepared from data contained in the previously prepared components of the master budget.

A) True
B) False

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Question 32

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Miles Company is preparing a cash budget for February.The company has $30,000 cash at the beginning of February and anticipates $75,000 in cash receipts and $96,250 in cash disbursements during February.Miles Company has an agreement with its bank to maintain a cash balance of $10,000.What amount,if any,must the company borrow during February to maintain a $10,000 cash balance?

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Question 33

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There are three major subgroups of the master budget.These are _________________,___________________,and _______________________.

A company's history indicates that 20% of its sales are for cash and the rest are on credit.Collections on credit sales are 20% in the month of the sale,50% in the next month,and 30% the following month.Projected sales for January,February,and March are $75,000,$92,000 and $60,000,respectively.The March expected cash receipts from all current and prior credit sales are $80,500.

Kent Company's May sales budget calls for sales of $900,000.The store expects to begin May with $50,000 of inventory and to end the month with $55,000 of inventory.Gross margin is typically 45% of sales.Compute the budgeted cost of merchandise purchases for May.

A managerial accounting report that presents predicted amounts of the company's assets,liabilities,and equity as of the end of the budget period is called a(n) :

Budget preparation is best determined in a top-down managerial approach.

Briefly describe a master budget and the sequence in which the individual budgets within the master budget are prepared.

Fairway's April sales forecast projects that 6,000 units will sell at a price of $10.50 per unit.The desired ending inventory is 30% higher than the beginning inventory,which was 1,000 units.Budgeted purchases of units in April would be:

Part of the cash budget is based on information taken from the capital expenditures budget.

For budgets to be effective:

There are at least five benefits from budgeting.Identify two of these benefits: (1)_______________________________________ (2)_______________________________________

The usual starting point for preparing a master budget is forecasting or estimating:

Why is the sales budget usually prepared first?

The budget that lists the dollar amounts to be both received from plant asset disposals and spent to purchase additional plant assets to carry out the budgeted business activities is the __________________________.

The most useful budget figures are developed:

What is a cash budget? How can management use a cash budget?

Which of the following budgets is part of the manufacturing budget?

Berkley Co.'s sales are 10% for cash and 90% on credit.Credit sales are collected as follows: 30% in the month of sale,50% in the next month,and 20% in the following month.On December 31,the accounts receivable balance includes $12,000 from November sales and $42,000 from December sales.Assume that total sales for January and February are budgeted to be $50,000 and $100,000,respectively.What are the expected cash receipts for February from current and past sales?

Kent Company anticipates total sales for April,May,and June of $800,000,$900,000,and $950,000 respectively.Cash sales are normally 25% of total sales.Of the credit sales,30% are collected in the same month as the sale,65% are collected during the first month after the sale,and the remaining 5% are not collected.Compute the amount of cash received from credit sales for May.