1.
A. Sales Budget:
- April: 65,000 units x $10 = $650,000
- May: 100,000 units x $10 = $1,000,000
- June: 50,000 units x $10 = $500,000
Total Sales: $2,150,000
B. Cash Collection Schedule:
- April Sales: $650,000
- 20% collected in April: $130,000
- 70% collected in May: $455,000
- 10% collected in June: $65,000
- May Sales: $1,000,000
- 20% collected in May: $200,000
- 70% collected in June: $700,000
- 10% collected in July: $100,000
- June Sales: $500,000
- 20% collected in June: $100,000
- 70% collected in July: $350,000
- 10% collected in August: $50,000
C. Merchandise Purchases Budget:
- April: 78,000 units (65,000 + (40,000 x 40%)) x $4 = $312,000
- May: 140,000 units (100,000 + (65,000 x 40%)) x $4 = $560,000
- June: 80,000 units (50,000 + (30,000 x 40%)) x $4 = $320,000
Total Purchases: $1,192,000
D. Disbursements for Merchandise Purchases:
- April Purchases: $312,000 (50% paid in April)
- May Purchases: $560,000 (50% paid in May)
- June Purchases: $320,000 (50% paid in June)
2.
Cash Budget:
- Beginning Cash Balance: $74,000
- Add: Total Cash Collections
- Deduct: Total Cash Disbursements
- Ending Cash Balance
3.
Budgeted Income Statement:
- Sales Revenue: $2,150,000
- Cost of Goods Sold:
- April: 78,000 units x $4 = $312,000
- May: 140,000 units x $4 = $560,000
- June: 80,000 units x $4 = $320,000
- Gross Profit
- Operating Expenses (Sales Commissions, Advertising, Rent, Wages and Salaries, Utilities, Insurance, Depreciation)
- Net Income
4.
Budgeted Balance Sheet:
- Cash
- Accounts Receivable
- Inventory
- Prepaid Insurance
- Fixed Assets (Net of Depreciation)
- Total Assets
- Accounts Payable
- Dividends Payable
- Common Shares
- Retained Earnings
- Total Liabilities and Shareholders' Equity
Question 1
Kankee Unlimited a nation wide distributer of law_ cost limitation disgner necklaces ,has an exclusive franchise on the distribution of the nechlaces and sales have grown so rapidly over the past few years that it has become necessary to add new memebers to the management team. To date, the company budgeting practices have been inferoir, and at times the company has expersensied a cash shortage . You have been given responsibilities for all plannig and budgeting . Your first assignment is to prepare a master budget for the next three month , starting april one , you are eager to make a favorable imprssion on the prisedent and have assembled the information below .
The nechlaces are sold to retailers for $10 each . Recent and fo cast sales in units are as follows .
January,(actual)----20,000 june,----50,000
February,(actual)----26,000 july----30,000
march(actual)---40,000 august ---28,000
April ---65,000 september ----25,000
May ---- 100,000
The large build up in sales before and during may is due to mother's day. ending inventories should be equal to 40% of the next months sales in unit's. the necklaces cost the comoany $4 each. Purchases are paid for as follows 50% in the month of purchase and the remaining 50%in the following month. all sales are on credit with no discount and payable within 15 day. the company has found ,however that only 20% of a months sales are collected by month end. an additional 70% is collected in the following month, and the remaining 10% is collected in the second month following sale.bad debates have been negligible . the company monthly saling and administrative expenses are given below variable .
sales commissions ------4% of sales
fixed
advertising --------$200,000
rent--------18,000
wages and salaries------106,000
utilities ------ 7000
insurance ------3000
depreciation ---------14,000
all saling and administrative expenses are paid during the month, incash, with the exception of depriciation and insurance.
ensurance is paid on an anual bases in November of each year .the campany plans to purchase$ 16,000 in new equipment during may and $40,000 in new equipment during june both purchases will be paid incash
the campany declares divedends of $15,000 each quarter,payable in the first month of the following quarter.the campanys valance sheet at march 31 is given below
assets
cash ---------74,000
accounts recible,$26,000 february sales $320,000 march sales,--------346,000
inventory -------104,000 prepaid ensurance 21,000
fixed assets , net of depreciation 950,000
total asset------ $1,495,000
liabilites and share holders equity
accounts payable-------$100,000
dividends payable ----- 15,000
common shares------800,000
retained earnings------580,000
total layabilities and share holders equity ----$ 1,495,000
3, The company wants a minimum ending cash balance each month of $50,000.all borrowing is done as the beginig of the month, with any repayments made at the end of the month.the interests rate on these loans is 1% per month and must be paid at the end of each month based on the out standing loan balance for that month.
requaried 1, A , a sales budget by month and total.
B, a schedule of expected cash collection from sales by month and in total.
C, a merchendise purchases budget in units and in dollar shows the budget by month and in total.
D, a schedule of exoected each disbursement for merchaindise purchase ,by month and in total.
2, a cash budgets show the budget by month and in total.
3, a budgeted income statement for the three month period inding June 30.youth the variable costing appproach.
4, a budgeted valance sheet as of june 30 .
1 answer
1 answer