Business Case6B

Assignment Week Case 6B

BUS 630 Managerial Accounting

Appendix

Cash Budget for Fourth Quarter

Information based from interim balance sheet dated September 30th.

October November December

Begin Cash

Expected Receipts

Cash Sales 826800 868200 911600

*40% paid month

Following billing

25% pays same month

NO cash discount 30% is collected

In second month after billing-

Remainder is uncollectible

Accounts Receivable 1012500

Other Renting

Unused warehouse

Space 24000

Total expected Receipts ___________________________________________________________

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Expected payments

Sixty percent of all purchases: selling, Administrative, Advertising is paid in month incurred

With the remainder paid in the following month. Ending Inventory is 25 percent of the next months budgeted cost of goods sold.

October November December

Equipment 250000

Other such dividends 45000

Accounts Payable 3541555

Other Payables 53200

Raw Materials

Inventories 150388

Other

At a meeting with Mr. Chester and Mr. Wayne to discuss concerns regarding findings in the Cash Budget has left both of them feeling uneasy regarding specific details of the Cash report budget. Accordingly, Mr. Wayne believes that the gross margin perhaps may shrink to 27.5 percent due to higher purchase prices and is also concerned with the impact that this may have on borrowings. This is a logical concern as gross margin shrinks amid higher purchasing prices/costs. As stated in Stewart (1987) Pricing is a crucial but often misunderstood aspect of retailing. Questions about pricing include the relation between margin and markup, the effect of lowering prices, how to price sale items, and how to create a positive price image.” It is good to remember that pricing creates the gross margin. A closer look...