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1. Sales for January are budgeted at 50,000 units, and the company expects sales to increase 4% each month. How many units will need to be purchased in February if the company's policy is to keep ending inventory each month at 10,000 units?

52,000 units

54,000 units

62,000 units

None of these answers is correct.

2. Select the correct equation format for the purchases budget.

Beginning inventory + expected sales = required purchases.

Cost of budgeted sales + beginning inventory - desired ending inventory = required purchases.

Beginning inventory + expected sales - desired ending inventory = required purchases.

Cost of budgeted sales + desired ending inventory - beginning inventory = required purchases.

3. Budgeted depreciation expense would not appear on a:

Selling and administrative expense budget.

Budgeted income statement.

Cash budget.

All of these answers are correct.

4 Hilliard Company budgeted the following transactions for April 2014:

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 surplus or shortage?

$40,000 surplus

$40,000 shortage

$20,000 shortage

There is no surplus or shortage.

5.

Bantam Industries has budgeted the following information for March:

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 March 1^st. The shortage or surplus of cash before considering cash borrowed in March would be:

$25,000 shortage.

$29,000 shortage.

$29,000 surplus.

$4,000 shortage.

Sales (75% collected in month of sale) Cash Operating Expenses Cash Purchases of Investments Cash Payment of Debt Depreciation on Operating Assets $200,000 105,000 75,000 15,000 12,000 $ Cash receipts Beginning cash balance Cash payments Desired ending cash balance 271,000 5,000 280,000 25,000

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