CMA Study Group

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  • 1.  CMA Part 1

    Posted 10-20-2021 06:53 PM

    Does anybody have the answer to problem 86 Section Planning, Budgeting, and Forecasting, I believe there is an error on the option for answers and I want to know if somebody has the right answer?


    Planning, Budgeting, and Forecasting

    86- Cooper Company's management team is preparing a cash budget for the coming quarter. The following budgeted information is under review.

                                 January                   February                    March

     Revenue              $700,000                $800,000                   $500,000

     Inv purchases        350,000                  425,000                     225,000

     Other exp               150,000                  175,000                     175,000

    The company expects to collect 40% of its monthly sales in the month of sale and 60% in the following month. 50% of inventory purchases are paid in the month of purchase, and the other 50% in the following month. All payments for other expenses are made in the month incurred. Cooper forecasts the following account balances at the beginning of the quarter.                                                  


    Cash                                     $100,000

    Accounts receivable               300,000

    Accounts payable (Inventory) 500,000


    Given the above information, the projected change in cash during the coming quarter will be?



    Thanks 

    Martha Z
    Accountant 








  • 2.  RE: CMA Part 1

    Posted 10-21-2021 09:04 AM
    Can you share the questions

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    Mohit Sharma
    Student
    Kolkata
    India
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  • 3.  RE: CMA Part 1

    Posted 10-22-2021 12:00 PM

    The projected changes in cash during the quarter will be calculated as follows:

    1-Cash Collection:

    January

    300000+(700000*40%)=580000

    February

    (700000*60%)+(800000*40%)=740000

    March

    (800000*60%)+(500000*40%)=680000

    Total cash collection=2000000............................A

    2-Inventory Purchases:

    January

    500000+(350000*50%)=675000

    February

    (350000*50%)+(425000*50%)=387500

    March

    (425000*50%)+(225000*50%)=325000

    Total Purchases= 1387500...........................B

    3-Other expenses

    January       150000

    February      175000

    March          175000

    Total            500000 ................... C

    Accordingly the total change in Cash during the quarter will be A-B-C

    =2000000-1387500-500000= 112500 (ANS)



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    G. Prasad
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