Circumstance: Chester & Wayne
Chester & David is a local food distribution company. Mr. Chester, CEO, has called for assistance with organizing cash-flow details for the last three months of this 12 months. The selected accounts from an interim "balance sheet" dated Sept 30, have the following amounts:
Cash$142, 100Accounts payable$354, 155
Marketable securities$200, 000Other payables $53, 2 hundred
Accounts receivable $1, 012, 500
Arrays $150, 388
Mr. Wayne, CFO, provided the following information based on knowledge and supervision policy. Every sales are credit revenue and are invoiced the last day of the month of sales. Customers having to pay within week of the billing date may take a 2 percent cash discount. Fourty percent in the sales happen to be paid inside the discount period in the month following invoicing. An additional 25 percent pays in the same month but would not receive the funds discount. 30 % is accumulated in the second month following billing; the remainder is uncollectible. Additional funds of $24, 000 is usually expected in October via renting unused warehouse space. Sixty percent of most purchases, providing and administrative expenses, and advertising expenditures are paid in the month incurred. The remainder is paid in the following month. Closing inventory is placed at 25 percent of the following month's budgeted cost of goods sold. You can actually gross earnings averages 30 percent of revenue for the month. Advertising and administrative expenses the actual formula of 5 percent of the current month's sales plus $75, 000, which include depreciation of $5, 1000. Advertising expenditures are budgeted at several percent of sales. Actual and budgeted sales details is as comes after:
August $750, 000October $826, 800
September $787, 500November$868, 200
December $911, 600
January $930, 1000
The company will acquire equipment costing $250, 000 money in November. Returns of $45, 000 will be paid in...
References: Schneider, Arnold. (2012) Managerial Accounting: Manufacturing and Service Applications.
San Diego, LOS ANGELES: Bridgepoint Education.