Name
Tutor
Course
Date
Accounting
Doha Trading Company
Cash Collection on Credit Sales
| June | July | August | |
| Credit Sales | 150,000 | 200,000 | 80,000 |
| Collection 1 | 90,000(June) | 120,000 (July) | 48,000 (Aug) |
| Collection 2 | 60,000 (June) | 80,000(July) | |
| Total Collection | 90000 | 180000 | 128000 |
Cash Disbursement for Purchase Inventory
| June | July | August | |
| Purchases | 20,000 | 190,000 | 177,000 |
| Payment 1 | 6000(June) | 57000(July) | 53100(Aug) |
| Payment 2 | 14000(June) | 133000(Jul) | |
| Total Payment | 6000 | 71000 | 186100 |
Cash Budget
| Doha Company | ||
| Cash Budget | ||
| July | August | |
| Beginning Cash Balance | 90,000 | 85,000 |
| Add Cash Collections | ||
| Cash Sales | 120,000 | 300000 |
| Credit sales collection (July) | 120,000 | 48000 |
| Credit sales (June) | 60,000 | 80000 |
| Total Cash Available | 390,000 | 513000 |
| Less: Cash Disbursements | ||
| Credit Purchases (July)(Aug) | 57000 | 53100 |
| Credit purchase (June)(Jul) | 14000 | 133000 |
| Other Expenses | ||
| Administration | 108000 | 42500 |
| Staff salaries | 126000 | |
| Land | 100,000 | |
| Total Expenses | 305000 | 328600 |
| Excess Cash | 85000 | 184,400 |
| Financing | 0 | |
| Ending Cash Balance | 85000 | 184,400 |
Saudi Trading Company
Cash Collection on Credit Sales
| April | May | June | |
| Credit Sales | 167,475 | 379,610 | 334,950 |
| Collection 1 | 33495 | 75922 (May) | 66990 (June) |
| Collection 2 | 130630.5(April) | 296095.8 (May) | |
| Total Collection | 33495 | 206552.5 | 363085.8 |
Cash Disbursement for Purchase Inventory
| April | May | June | |
| Purchases | 288,000 | 247500 | 99000 |
| Payment 1 | 172800 (April) | 148500 (May) | 59400 (June) |
| Payment 2 | 115200(April) | 99000 (May) | |
| Total Payment | 172800 | 263700 | 158400 |
Cash Budget
| Saudi Trading Company | ||
| Cash Budget | ||
| May | June | |
| Beginning Cash Balance | 65,000 | 60000 |
| Add Cash Collections | ||
| Cash Sales | 195,000 | 231,000 |
| Credit sales collection 1 | 75922 | 66990 |
| Credit sales 2 | 130630.5 | 296095.8 |
| Total Cash Available | 466552.5 | 654085.8 |
| Less: Cash Disbursements | ||
| Credit Purchases (July) | 148500 | 59400 |
| Credit purchase (June) | 115200 | 99000 |
| Other Expenses | ||
| Employees’ Salaries | 60000 | 60000 |
| Equipment | 100000 | |
| Selling Expense | 40000 | 128000 |
| Rent Expenses | 190000 | |
| Total Expense | 553700 | 446400 |
| Excess/ Deficit Cash | -87147.5 | 207685.8 |
| Financing Required | ||
| Borrowing | 147,387.5 | |
| Repayments | 147387.5 | |
| Interest | 240 | 240 |
| Total Financing | 147,147.5 | (147627.5) |
| Ending Cash Balance | 60000 | 60058.3 |
Problem 2
- Contribution Margin
- Gross Margin
Solution
Selling cost (23+25)= 48
Contribution Margin= [(Sales- Variable Costs)/Net Sales]
Total Sales= 48*10,000= 480,000
Variable costs= 15* 10,000= 150,000
(Selling) Cost of goods sold per unit= 10*10,000= 100,000
Contribution Margin
480,000-150,000-100,000= 230,000
Gross Contribution margin= {[Sales- (Cost of a good- Selling and Admin cost)]/sales}
480,000-15,000-150,000= 315,000
Gross Margin= 33* 10,000= 330,000
Problem 3
Saudi Shipping Expense
Cost of 10,000 pounds= (27500-20,000= 7500)
5,000 pounds= 3750
2,500 pounds= 20,000+ 3750= 23,750
Note: Marginal cost is used since all volumes have a fixed cost.
Problem 4
A Contribution Margin
Contribution Margin= [(Sales- Variable Costs)/Net Sales]
Contribution margin= 1,400,000-(60,000+ 140,000+ 640,000)= 560,000
560,000/1400,000= 40%
Gross Contribution Margin
Gross Contribution margin= {[Sales- (Cost of a good- Selling and Admin cost)]/sales}
Gross contribution margin= 1400, 000- 640,000-220,000-100,000= 440,000
440/1400= 31.4286%
Net Income in First Quarter
Net income= Sales- Total Cost
1400, 000- 640,000-220,000-100,000- 60,000- 140,000= 240,000
Saudi Furniture
- Direct material= Fabric used in upholster+ Lumber used to build+ Wages assembly line
Direct Material = 10,000+ 82,000 + 155,500= 247,500
- Indirect Materials= Utilities in Factory+ Lubricants in factory+ Freight-in
54500+ 3000+ 3000= 60,500
- Period= Depreciation on sales office+ sales commission+ cost to delivery+ Utility in sale office
26500+ 9000+ 23000+ 9000= 67500
- Product= direct labor+ Direct materials + consumable production+ supplies+ factory overhead
260,000+247,500+ 155,500+ 3000= 666000
- Manufacturing Overhead= Utilities in factory+ Insurance cost+ Lubricant in Factory+ Factory Supervisor+ Depreciation of Factory Equip+ maintenance workers
16000+ 50,500+3000+ 21000+ 54500+ 115,000= 260,000
- Conversion= Direct labor + Manufacturing Overhead
260,000+ 155,500= 415500
- Prime= Assembly line workers+ Lumber Used + Fabric Used in Upholstery
10,000+ 155500+ 82,000= 247500
Multiple Choice Question
Question 5
True (T)
Question 6
False (F)
Question 7.
- C) Providing information that managers need to make operational decisions
Question 8
- At the end of the accounting period they are incurred in.
Question 9
False (F)
Question 10
False (F)
Question 11
True (T)
Question 12
True (T)
Question 13
False (F)