ACCOUNT 249 Chapter 8: Third Dimension Prototypes Graded Homework Assignment 15 points Assignment Learning Goals This assignment is designed to help you learn how to: 1. Prepare of schedule of expected cash collections. 2. Prepare a cash budget. Required

 
 
ACCOUNT 249
Chapter 8: Third Dimension Prototypes Graded Homework Assignment
15 points
Assignment Learning Goals
This assignment is designed to help you learn how to:
1. Prepare of schedule of expected cash collections.
2. Prepare a cash budget.
Required
1. Read the information about Third Dimension Prototypes presented on page 2.
2. Use the calculation forms presented on pages 3 and 4 to organize the information you have been given.
3. Use concepts presented in Chapter 8 to make the calculations necessary to determine the required
information.


Guidelines and Policies for Graded Assignments
1. Your assignment can be hand-written or computerized using Word or Excel.  However, you must present your
answer using the forms presented on pages 3 and 4.  Five points will be deducted from your score if your
answer is not presented using the T-accounts and forms presented on pages 3 and 4.

2. All assignments will be collected at the beginning of the class period in which the assignment is due. 

3. All assignments must be turned in during the class period in which they are due in order to receive full credit. 
As stated in the course syllabus, grades will be reduced by 25% for assignments turned in by midnight of the
day they are due.  No credit will be given for any assignment turned in after the day on which it is due unless
the student discusses a specific situation with the instructor before the assignment is due.  

4. Be sure your name and section number is on the assignment you turn in.


 
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Chapter 8: Third Dimension Prototypes Graded Homework Assignment
15 points

About a year ago, Terry and Taylor Varney started Third Dimension Prototypes, a 3D printing company specializing
in creating prototypes for manufacturers using resin, plastic, or reinforced nylon.  When they started their business,
the Varney twins rented a small commercial space and leased several 3D printers.  They purchased some office
furniture, shelving units, and the technology they needed to run their business.  They currently pay themselves
minimal salaries because they were both able to save enough money to live on for a few years before they quit
their jobs in the tech industry related to manufacturing.
 
Terry and Taylor consider their first year in business to be very successful so they have decided to purchase a
small 3D printer and continue to lease their current printers.  Additionally, after last year’s experiences, they are
now aware that the manufacturers they are working with will order more prototypes in the spring.  As a result, they
will have to buy more of resin, plastic, and nylon in the spring so the materials are on hand when the orders come
in.  Because of the time difference between when they have to buy the necessary raw materials and when they will
receive payment for the prototypes, they would like to take out a short-term loan from the local bank.

Casey Reynolds, the loan officer at their bank, has asked for a number of documents including a schedule of
expected cash collections and a cash budget to help determine whether the loan should be made.  The Varney
twins plan to buy the 3D printer when they have the most orders coming in.  The following data are available for the
months April through June, the period during which the loan will be used. 

a. On April 1, the start of the loan period, the cash balance will be $34,800.  On April 1, accounts receivable will
total $396,289, of which $349,780 will be collected during April and $34,650 will be collected during May.  The
remainder will be uncollectible.

b. Last year, 25% of a month’s sales were collected in the month of sale, 65% in the month following sale, and
7% in the second month following the sale.  The other 3% represents bad debts that have not been collected
to date.  Budgeted sales and expenses for the three-month period are presented in Table 1.

Table 1
Budgeted Sales and Purchases for Second Quarter
 
April May June
Sales (all on account) $525,000 $690,000 $760,000
Raw materials  $304,500 $232,000 $350,000
Payroll $29,000 $29,000 $26,100
Lease & rent payments $87,000 $87,000 $72,500
Utilities $700 $1,000 $1,350
Advertising $31,400 $30,300 $30,950
Equipment purchases - - $94,250
Depreciation $1,750 $1,750 $2,535

c. Raw materials are paid in full during the month following purchase.  Accounts payable for merchandise
purchases during March, which will be paid during April, total $203,000.

d. In preparing the cash budget, assume that the $43,500 loan will be made in April and repaid in June.  Interest
on the loan will total $1,740 and will be paid in June.

Required
1. Prepare a schedule of expected cash collections for April, May, and June, and for the three months in total.
2. Prepare a cash budget, by month and in total, for the three-month period.
 
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 C h a p t e r  8 :  T h i r d  D i m e n s i o n  P r o t o t y p e s  G r a d e d  H o m e w o r k  A s s i g n m e n t 
1 5  p o i n t s
 
S t u d e n t  N a m e :               S e ct i o n  N u m b e r :     
 
1 .  P r e p a r e  a  sch e d u l e  o f  e x p e ct e d  ca sh  co l l e ct i o n s  f o r  A p r i l ,  M a y ,  a n d  Ju n e ,  a n d  f o r  t h e  t h r e e  m o n t h s  i n  t o t a l .
 
T H I R D  D I M E N S I O N  P R O T O T Y P E S
S C H E D U L E  O F  E X P E C T E D  C A S H  C O L L E C T I O N S 
S E C O N D  Q U A R T E R 
C a l cu l a t i o n s A p r i l  M a y Ju n e  Q u a r t e r
C o l l e ct e d  f r o m  A p r i l  1
   
st
 
a cco u n t s  r e ce i v a b l e  b a l a n ce 
F r o m  A p r i l  sa l e s:
$ 5 2 5 , 0 0 0  x  2 5 %     
    
    
F r o m  M a y  sa l e s:
    
    
F r o m  Ju n e  sa l e s:
    
T o t a l  ca sh  co l l e ct i o n s     
 
2. Prepare a cash budget, by month and in total, for the three-month period.  Use the cash collections
from customers presented in the cash budget.
 

THIRD DIMENSION PROTOTYPES
CASH BUGET
SECOND QUARTER
 April May June Quarter
Beginning cash balance 34,800   
Add Receipts:
Collections from customers
(Assume the amounts provided)
304,500 458,200 491,550 
    
Less Cash Disbursements:
    
    
    
    
    
    
    
Excess (deficiency) of cash
available over disbursements
   
Financing:
    
    
    
    
Ending cash balance   
 
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