Question 1: Premier Company has budgeted the following information for June:
Cash receipts $542,000
Beginning cash balance $10,000
Cash payments $560,000
Desired ending cash cushion $50,000
If there is a cash shortage, the company borrows money from the bank. All cash is borrowed at the beginning of the month in $1,000 increments and interest is paid monthly at 1% on the first day of the following month. The company had no debt before June 1st. The amount of interest paid on July 1 would be
A) $800
B) $580
C) $500
D) $442
Question 2: Harker Company budgeted the following transactions for April 2008:
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Sales (75% collected in month of sale)
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$200,00C
|
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Cash Operating Expenses
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105,00C
|
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Cash Purchases of Investments
|
75,00C
|
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Cash Payment of Debt
|
15,00C
|
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Depreciation on Operating Assets
|
12,00C
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The beginning cash balance was $50,000. The company desires to have a $25,000 ending cash balance. What is the amount of the cash overage or shortage?
A) $20,000 overage
B) $40,000 shortage
C) $20,000 shortage
D) There is no overage or shortage.
Question 3: Premier Company has budgeted the following information for June:
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Cash receipts
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$542,000
|
|
Beginning cash balance
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$ 10,000
|
|
Cash payments
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$560,000
|
|
Desired ending cash cushion
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$ 50,000
|
If there is a cash shortage, the company borrows money from the bank. All cash is borrowed at the beginning of the month in $1,000 increments and interest is paid monthly at 1% on the first day of the following month. The company had no debt before June 1st. The amount of interest paid on July 1 would be
A) $800
B) $580
C) $500
D) $442
Question 4: The following budget information is available for the Arvada Company for January 2007:
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Sales
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$430,000
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Cost of goods sold
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$270,000
|
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Freight out
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$1,400
|
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Administrative salaries
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$50,000
|
|
Sales commissions
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5% of sales
|
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Advertising
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$10,000
|
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Depreciation on store equipment
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$25,000
|
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Rent on administration building
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$30,000
|
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Miscellaneous administrative expenses
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$5,000
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All operating expenses are paid in cash in the month incurred. The total budgeted selling and administrative expenses (excluding interest), would be what amount for January 2007?
A) $142,900
B) $141,500
C) $120,000
D) $131,250
Question 5: Sheffield Company expects to begin operating on July 1, 2007. The company's master budget contained the following operating expense budget:
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July
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August September
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Salary expense
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$18,00C
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$18,0001 $18,00C
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Sales commissions, 5% of sales
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15,00C
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16,000 12,00C
|
|
Utilities
|
1,40C
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1,400 1,40C
|
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Depreciation on store equipment
|
50C
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500 50C
|
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Rent
|
3,60C
|
3,600 3,60C
|
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Miscellaneous
|
90C
|
900 90C
|
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Total operating expenses
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$39,40
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$40,401 $36,40C
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Sales commissions are paid in cash in the month following the month in which the expense is recognized. All other expense items requiring cash payment are paid in the month in which they are recognized. The amount of commissions payable that would appear on the company's September 30, 2007 pro forma balance sheet is
A) $15,000
B) $18,000
C) $12,000
D) $16,000