Posted on

The Beginning Cash Collections Are Added To The Beginning Cash Balance Accounting Essay

Harmonizing to Braun, Tietz and Harrison ( 2010 ) , the combined hard currency budget merges the budgeted hard currency aggregations and hard currency payments to project the company ‘s stoping hard currency place. The beginning hard currency aggregations are added to the beginning hard currency balance to happen the entire hard currency that is available. The budgeted hard currency payments are so subtracted to acquire the stoping hard currency balance before funding and based on this, the company knows whether it needs to borrow money or whether it has to borrow money or it has extra financess to refund or put.

( Continued C9-72 )

Measure 1: Combined Cash Budget for four months stoping December 31.

Suzanne De Angelo, Weaver Combined Cash Budget For the Quarter Ended December 31

Cotton

Linen

Get downing balance of hard currency

$ 25

$ 25

Cash aggregations ( based on Exhibit 9-14 & A ; 9-5 from the text edition ) :

Cotton gross revenues [ 25 A- ( 0.90 A- $ 20 ) ]

450

Linen gross revenues [ 15 A- ( 0.90 A- $ 50 ) ]

675

Entire hard currency available

$ 475

$ 700

De Angelo ‘s hard currency expenses:

Histories collectible

$ 74

$ 74

Cost of linen ( 15 A- $ 18 )

270

Purchase of new loom

1,000

Entire hard currency expenses

74

1,344

Ending hard currency balance before funding

401

( 644 )

Financing:

Borrowings

$ 1,000

Refunds

( 200 )

Interest payment ( $ 1,000 A- 0.18 A-

4/12 )

( 60 )

Entire consequence of funding

740

End hard currency balance

$ 401

$ 96

( Continued C9-72 )

Measure 2a: Budgeted Income Statement for four months stoping December 31

Harmonizing to Braun, Tietz and Harrison ( 2010 ) , the budgeted income statement helps directors know in progress whether their programs will ensue in an acceptable degree of income. If non, they will hold to cut their disbursals and increase gross revenues grosss. I used Exhibits 9-5, 9-10 and 9-12 to make this portion of the job.

Suzanne De Angelo, Weaver Budgeted Income Statement For Four Months Ending December 31

Cotton

Linen

Gross saless gross

Cotton gross revenues [ 25 A- ( 0.90 A- $ 20 ) ]

$ 450

Linen gross revenues [ 15 A- ( 0.90 A- $ 50 ) ]

$ 675

Less: Cost of goods sold:

Cotton ( 25 A- $ 7 )

( 175 )

Linen ( 15 A- $ 18 )

( 270 )

Less: Operating Expense:

For old loom ( 4 A- $ 10 )

( 40 )

( 40 )

For new loom ( 4 A- $ 20 )

A A A A A A A A

( 80 )

Operating income

235

285

Less: Interest disbursal ( $ 1,000 A- 0.18 A- 4/12 )

A A A A A A A A

( 60 )

Net income

$ 235

$ 225

( Continued C9-72 )

Step2b: Budgeted Balance Sheet

I have done this utilizing Exhibit 9-17 from Braun, Tietz and Harrison ( 2010 ) as a mention.

Suzanne De Angelo, Weaver Budgeted Balance Sheet December 31

Assetss

Current Assetss

Cotton

Linen

Cash ( from combined budget )

$ 401

$ 96

Natural stuffs Inventory

175

Entire Current Assets

401

271

Fixed Assetss

Loom

500

1500

Less: Accumulated Depreciation

280 [ $ 240 + $ 40 ( runing disbursal in step2a ) ]

360 [ $ 240 + $ 40 + $ 80 ( runing disbursal in step2a ) ]

Entire fixed assets

220

1140

Entire assets

621

1411

Liabilitiess

Histories Collectible

800 [ 1000-200 ]

Entire liabilities

800

Owners Equity

621 [ 386 + 235 ( net income from step2a ) ]

611 [ 386 + 225 ( net income from measure 2a ) ]

Entire liabilities and proprietors equity

$ 621

$ 1,411

Requirement 2

Based on fiscal considerations merely, I believe that by go oning to weave the topographic point mats in cotton utilizing the bing loom, De Angelo will hold $ 401 ad the terminal hard currency balance ( from measure 1 in demand 1 ) . If the new looms are used, the hard currency balance on December 31 is merely $ 96.

( Continued C9-72 )

Besides, from measure 2 in demand the net income difference is $ 235- $ 225 = $ 10. Hence I suggest that De Angelo can go on to weave the topographic point mats in cotton utilizing the bing loom instead than purchasing new looms and pay debts.

Requirement 3

The non-financial affair that De Angelo must see is: She might believe that with the new loom, she may weave more originative & A ; attractive mats instead than with the old cotton.

2. ( a ) Exercise E9-21A, page 512: Direct Materials Budget

Direct Materials Budget

Beckett Industries Direct Materials Budget For the Quarter ended March 31

January

February

March

One-fourth

Unit of measurements to be produced ( from Production Budget )

5,000

4,400

4,800

14,200

* Quantity ( french friess ) of DM needed per unit

* 3

* 3

* 3

* 3

Quantity ( french friess ) needed for production

15,000

13,200

14,400

42,600

Plus: Coveted terminal stock list of DM

+ 2,640

+ 2,880

+2,520 [ 4,200 * 3 * 20 % = 2,520 ]

+ 2,520

Entire measure ( french friess ) needed

17,640

16,080

16,920

45,120

Less: Get downing Inventory of DM

– 3,000

– 2,640

– 2,880

– 3,000

Quantity ( french friess ) to buy

14,640

13,440

14,040

42,120

* Cost per bit

* $ 2.00

* $ 2.00

* $ 2.00

* $ 2.00

Entire cost of DM purchases

$ 29,280

$ 26,880

$ 28,080

$ 84,240

( B ) Exercise E9-23A, page 513: Direct Labor Budget

Madden Industries Direct Labor Budget For the Upcoming Year

A

Nothings

Flashs

Royals

Sum for the twelvemonth

Cutting Department

Unit of measurements to be produced ( from Production Budget )

500

700

800

A

* Direct labour hours per unit

* 1

* 1.5

* 1.2

A

Entire film editing hours required

500

1,050

960

A

* Direct labour cost per hr

* $ 10

* $ 10

* $ 10

A

Budgeted DL cost

$ 5,000

$ 10,500

$ 9,600

$ 25,100

A

A

A

A

A

Assembly Department

Unit of measurements to be produced ( from Production Budget )

500

700

800

A

* Direct labour hours per unit

* 2

* 2.4

* 2.3

A

Entire assembly hours required

1,000

1,680

1,840

A

* Direct labour cost per hr

* $ 12

* $ 12

* $ 12

A

Budgeted DL cost

$ 12,000

$ 20,160

$ 22,080

$ 54,240

Entire budgeted DL cost for the company )

$ 17,000

$ 30,660

$ 31,680

$ 79,340

3. Exercise C9-71, page 541: Suggest public presentation betterments

Date: 12/29/10

TO: Jeff Towry, Manager

Cycle World

FROM: Donna Tse

Subject: Cycle World ‘s budgeted income statement.

The driving force of budgeting is our company ‘s long term ends and schemes. The budgeted income statement prepared for the twelvemonth stoping July 31 shows that the company would incur net loss of $ 2,025. Hence I believe that the company needs to better its gross revenues gross to avoid this operating loss.

I suggest that in order to accomplish high / addition gross revenues grosss, we need to first increase our gross revenues monetary value and utilize proper advertizements to advance our merchandise to clients. The salary and committee disbursal is $ 46,000. We can cut down this operating disbursal by cut downing the figure of employees. Assorted disbursal is besides high and needs to be reduced. Besides, rent disbursals can be reduced by traveling to a vicinity where we would incur less disbursal.

4. Exercise C10-76, page 611: Compute flexible budget and gross revenues volume discrepancies

Requirement 1

Reel Time Inc Income Statement Performance Report Month Ended July 31

Actual Results at Actual Monetary values

Flexible Budget Discrepancy

Flexible Budget for Actual Number of Output Unit of measurements

Gross saless Volume Discrepancy

Static ( Master ) Budget

Output Units ( pools installed )

82,000 [ $ 1,640,000 / 20 ]

0

82,000 [ $ 1,640,000 / 20 ]

16000 Uracil

98,000 [ 1,960,000/20 ]

Gross saless Gross

$ 1,640,000

0

$ 1,640,000

$ 320,000 U

$ 1,960,000

Variable disbursals:

Cost of goods sold

773,750

46,250F

820,000

160,000 F

980,000

Gross saless committees

77,375

12,825F

90,200

17,600F

107,800

Transporting disbursal

42,850

2,250F

45,100

8,800F

53,900

Fixed disbursals:

Salary disbursal

311,450

10,950U

300,500

0

300,500

Depreciation disbursal

208,750

5,250F

214,000

0

214,000

Rent disbursal

128,250

20,000U

108,250

0

108,250

Ad disbursal

81,100

12,600U

68,500

0

68,500

Entire disbursals

1,623,525

23,025F

1,646,550

186,400F

1,832,950

Operating income

$ 16,475

$ 23,025F

$ 6,550

133,600U

$ 127,050

( Continued C10-76 )

Requirement 2:

Harmonizing to Braun, Tietz and Harrison ( 2010 ) , directors must cognize why a discrepancy occurred to nail jobs and to place disciplinary action. To cognize why inactive budget discrepancy occurred, directors separate the inactive budget discrepancy into two different parts: Gross saless volume budget and flexible budget discrepancies.

I understand that all favourable discrepancies addition runing income and all unfavourable discrepancies lessening runing income. The gross revenues volume discrepancy is $ 133,600 for the operating income. This is higher and is non favourable.

As a member of Reel Time ‘s direction squad, I would wish to look into both the unfavourable gross revenues volume and all flexible budget discrepancies. The rent and the advertisement disbursals must besides be investigated. Care should be taken that there should be proper advertisement for the merchandise which would hike its gross revenues.

( Continued C10-76 )

Requirement 3

If consumers are proroguing purchase until after the debut of a new format for recordable DVD Players, so I feel that it is of import that Reel Time direction usage proper advertizement run to better gross revenues. The company might make a good occupation this manner by increasing the demand for the merchandise through proper advertizements.

Essay Question

1. C10-78, page 613: Ethical quandary associating to criterions

The Institute of Management Accountants ( IMA ) is the professional association of all direction comptrollers. There are many ethical challenges that direction comptrollers face these yearss. IMA hence developed some rules and criterions to assist them follow ethical behaviour. The companies must keep professional competency, preserve confidentiality of information, uphold unity and execute responsibilities with credibleness by following certain ethical rules that include honestness, equity, objectiveness & A ; duty. The company directors must swear the other parties ethical concern patterns which acts as a critical constituent to the company ‘s concern determinations.

Issue One

In this instance, Willis wants Landers to supply her with the last three old ages of Sun Coast ‘s criterion and existent costs which I believe is a company ‘s confidential information. Harmonizing to the IMA criterions, it is unethical for Landers to supply this information.

( Continued C10-78 )

Since Willis house is a new house, it is of import for Landers to do certain that they maintain the client confidentiality. Besides, since Willis is ready to supply Landers with benchmarks for the out-of-door furniture industry free of charge, I once more believe that it is every bit of import for Landers to see the fact that the Willis house is new and if they will be able to supply proper benchmarks.

However, Landers needs permission from his accountant to travel in front with this offer.

Issue Two

In this instance, I understand that Landers standard cost determination is really of import as they are get downing a uninterrupted betterment policy that requires a 10 % decrease in standard costs each twelvemonth for the following three old ages.

Harmonizing to the IMA criterions, it is of import for Landers to uphold unity of his company and execute his responsibilities with credibleness by following certain ethical rules that include honestness, equity, objectiveness & A ; duty. Landers might besides discourse about this to his accountant to do a wise determination.

Leave a Reply

Your email address will not be published.