Questions -
Q1. Mosbey Inc. is working on its cash budget for June. The budgeted beginning cash balance is $16,000. Budgeted cash receipts total $188,000 and budgeted cash disbursements total $187,000. The desired ending cash balance is $40,000. The excess (deficiency) of cash available over disbursements for June will be:
$17,000
$1,000
$15,000
$204,000
2. The Carlquist Company makes and sells a product called Product K. Each unit of Product K sells for $24 dollars and has a unit variable cost of $18. The company has budgeted the following data for November:
- Sales of $1,152,200, all in cash.
- A cash balance on November 1 of $48,000.
- Cash disbursements (other than interest) during November of $1,160,000.
- A minimum cash balance on November 30 of $60,000.
If necessary, the company will borrow cash from a bank. The borrowing will be in multiples of $1,000 and will bear interest at 2% per month. All borrowing will take place at the beginning of the month. The November interest will be paid in cash during November.
The amount of cash needed to be borrowed on November 1 to cover all cash disbursements and to obtain the desired November 30 cash balance is:
$21,000
$20,000
$38,000
$37,000
Q3. The production budget is typically prepared prior to the sales budget.
True
False