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Managerial accounting problems: Premier, Harker, Arvada, She

16. Premier Company has budgeted the following information for June:

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 June 1st. The amount of interest paid on July 1 would be
A) $800
B) $580
C) $500
D) $442

17. Harker Company budgeted the following transactions for April 2008:

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 overage or shortage?
A) $20,000 overage
B) $40,000 shortage
C) $20,000 shortage
D) There is no overage or shortage.

18. Premier Company has budgeted the following information for June:

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 June 1st. The amount of interest paid on July 1 would be
A) $800
B) $580
C) $500
D) $442

19. The following budget information is available for the Arvada Company for January 2007:

All operating expenses are paid in cash in the month incurred. The total budgeted selling and administrative expenses (excluding interest), would be what amount for January 2007?
A) $142,900
B) $141,500
C) $120,000
D) $131,250

20. Sheffield Company expects to begin operating on July 1, 2007. The company's master budget contained the following operating expense budget:

Sales commissions are paid in cash in the month following the month in which the expense is recognized. All other expense items requiring cash payment are paid in the month in which they are recognized. The amount of commissions payable that would appear on the company's September 30, 2007 pro forma balance sheet is
A) $15,000
B) $18,000
C) $12,000
D) $16,000

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16. Premier Company has budgeted the following information for June:

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 June 1st. The amount of interest paid on July 1 would be
A) $800
B) $580
C) $500
D) $442
Answer: B
10,000 + 542,000 - 560,000 = -8,000
Short of 8,000 + 50,000 = 58,000 x 1% = $580

17. Harker Company budgeted the following transactions for April 2008:

The ...

Solution Summary

This solution is comprised of a detailed explanation to calculate amount of interest paid, amount of the cash overage or shortage, and amount to be shown on proforma balance sheet.

$2.19