Solve accounting relating problems; 1 a

| October 22, 2018

Qatar University
College of Business and Economics
Department of Accounting and Information
System
Management Accounting — ACCT 116
Group Project – Spring 2013
SUBMISSION
DEADLINE: THURSDAY 23 MAY 2013

Student Learning Outcomes:

1.
Solve accounting relating problems; and

2.
Work effectively in teams.

A&A Corporation

A&A Corporation, a rapidly expanding
specialist photocopier manufacturer, is in the process of formulating plans for
next year. The director of marketing has completed her sales budget and is
confident that sales estimates will be met or exceeded. The following budgeted
sales figures show the growth expected and will provide the planning basis for
other corporate departments.

Budgeted
sales in $

Budgeted
sales in $

January

1 800 000

July

3 000 000

February

2 000 000

August

3 000 000

March

1 800 000

September

3 200 000

April

2 200 000

October

3 200 000

May

2 500 000

November

3 000 000

June

2 800 000

December

3 400 000

You, as a group of 4 students acting as FOUR
assistant chief accountants, have been given the responsibility for formulating
the cash budget, a critical element during a period of rapid expansion. The
following information provided by operating managers will be used in preparing
the cash budget:

1.
A&A Corporation has experienced an excellent
record in debtors’ collection and expects this trend to continue. 60% of
billings are collected in the month after the sale and 40% in the second month
after the sale. Uncollectable accounts are negligible and will not be
considered in this analysis.

2.
The purchase of raw materials is A&A’s largest
expenditure; the cost of these items equals 50% of sales. Prior experience
shows that 80% of creditors are paid by A&A one month after receipt of the
purchased materials, and the remaining 20% are paid the second month after
receipt.

3.
Hourly wages depend on sales volume and are equal
to 20% of the current month’s sales. These wages are paid in the month
incurred.

4. General and administrative expenses are budgeted to
be $2 640 000 for the year. The composition of these expenses is given below.
All of these expenses are incurred evenly throughout the year except the
property taxes. Property taxes are paid in four equal instalments in the last
month of each quarter.

Salaries

$480 000

Promotion

$660 000

Property taxes

$240 000

Insurance

$360 000

Utilities

$300 000

Depreciation

$600 000

Corporation
tax payments are made by A&A in the first month of each quarter based
on the profit for the prior quarter. A&A’s tax rate is 40%. A&A’s
net profit for the first quarter is projected to be $612 000.

Equipment
and warehouse facilities are being acquired to support the company’s
rapidly growing sales. Purchases of equipment and facilities are budgeted
at $28 000 for April and $324 000 for May.

A&A
has a corporate policy of maintaining an end-of-month cash balance of $100
000. Cash is borrowed or invested monthly, as needed, to maintain this
balance. Interest expense on borrowed funds is budgeted at $8 000 for the
second quarter, all of which will be paid during June.

Required (MIND THE WEIGHT
OF EACH REQUIREMENT):

Using
an excel sheet that shows the relevant formulas; prepare a schedule of
cash collections for A&A Corporation by month and in total only
for the second quarter. (THIS QUESTION WEIGHS
20%)

Using
an excel sheet that shows the relevant formulas; prepare a schedule of
cash payments for A&A Corporation by month and in total only for
the second quarter. (THIS QUESTION WEIGHS 20%)

Using
an excel sheet that shows the relevant formulas; prepare a cash budget for
A&A Corporation by month and in total only for the second
quarter. Be sure that all receipts, disbursements and borrowing
investing amounts are shown for each month. (THIS QUESTION WEIGHS 40%)

4.
Discuss why cash budgeting is particularly
important for a rapidly expanding company such as A&A Corporation. (THIS
QUESTION WEIGHS 20%)

IMPORTANT REMARKS

Submission deadline is Thursday 23rd
May 2013. Each member (student) shouldjoin a group on the blackboard until forming a
group of maximum 4 members. When
submitting your final project report you MUST
state your group number that joined on the blackboard. It is assumed and
expected that each member of the group should do a fair share of the work. The report is a joint responsibility, and each
member is responsible for numerical accuracy, presentation, and standard of
writing: marks awarded for the report will be the same for ALL members.
If there are problemswithin the group
which you cannot resolve, please discuss with your instructor. If the problems
are not resolved and it is felt there has been an unequal contribution, then, exceptionally,you
should inform your instructor of the proportion of the work whichhas been contributed by each member.

2

Academic
integrity

You should use your own
words, not quote phrases from textbooks and lecture handouts. It is
expected that you will use textbooks to obtain an understanding of Budgeting.
If you use textbooks as the source of ideas for your report, you must provide
a reference. Not to do so would be plagiarism – a breach of re gulations
withserious penalties.

Submission of report

ALL FOUR MEMBERS should submit the
project online by the due date; Thursday 23rd
May 2013.Each submitted project report should include a
front pagestating your group number on
the blackboard and the full names and student ID numbers of all the members who
joined you. Please note that no extension to this date is permitted, so make sure
you plan your time so there is no last minute rush. Assignments submitted after
this date will not be marked. However, if you experienced a serious and
unforeseeable problem which prevented you submitting your work on time, you
should consult the instructor.

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