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Assignment Budgeting 1 Worksheet
Assignment Budgeting 1 Worksheet
Assignment Budgeting 1 Worksheet
Total Assets:
741,000
Additional Information: a) b) Sales for March total 10,000 units. Each months sales are expected to exceed the prior months results by 5%. The products selling price is 25 per unit. Company policy calls for a given months ending inventory to equal 80% of the next months expected unit sales. The 31st March inventory is 8,400 units, which complies with this policy. The purchase price is 15 per unit. Sales representatives commissions are 12.5% of sales and are paid in the month of the sales. The sales managers monthly salary will be 3,500 in April and 4,000 per month thereafter. Monthly general and administrative expenses include 8,000 administrative salaries, 5,000 depreciation and 0.9% monthly interest on the long term note payable. The company expects 30% of sales to be for cash and the remaining 70% on credit. Receivables are collected in full in the month following the sale [none is collected in the month of the sale].
c)
d)
e)
BMAC 250
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h) i) j)
Required: Prepare the following budgets and other financial information as required: 1. 2. 3. 4. 5. 6. 7. 8. Sales budget, including budgeted sales for July. (a) Purchases budget, (b) the budgeted cost of goods sold for each month and quarter, and (c) the cost of the 30th June budgeted inventory. Selling expense budget. General and administrative expense budget. Expected cash receipts from customers and the expected 30th June balance of accounts receivable. Expected cash payments for purchases and the expected 30 th June balance of accounts payable. Cash budget. Budgeted income statement.
BMAC 250
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7. Prepare the cash budget by combining the given information and the amounts of cash receipts and cash payments on account that you computed. Complete the cash budget for each month by either borrowing enough to raise the preliminary balance to the minimum or paying off short term debt as much as the balance allows without falling below the minimum. Show the ending balance of the short term note in the budget. 8. Prepare the budgeted income statement by combining the budgeted items for all three months. Determine the income before income taxes and multiply it by the 35% rate to find the quarters income tax expense.
BMAC 250
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10,500 x 25 262,500
11,025 x 25 275,625
2(a) Purchases Budget Next periods unit sales (Part 1) Ending inventory percent Desired ending inventory Current periods unit sales (Part 1) Units to be available Less beginning inventory Units to be purchased
Quarter
x 15 163,800
x 15 171,990
x 15 180,585 516,375
BMAC 250
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2(b) Budgeted Cost of Goods Sold This periods unit sales (Part 1) Budgeted cost per unit Projected cost of goods sold
Quarter
496,515
2(c) Budgeted Inventory for 30th June Units (Part 2) Cost per unit Total
3. Selling Expense Budget Budgeted Sales Commission percent Sales commissions Managers salary Projected selling expenses
4. General and Administrative Expense Budget Administrative salaries Depreciation Interest on long term note payable (0.9% x 200,000) Projected expenses
BMAC 250
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5. Expected Cash Receipts from Customers Budgeted sales (Part 1) Ending accounts receivable (70%) Cash receipts: Cash sales (30%) Collections of prior periods receivables Total cash to be collected
Quarter
6. Expected Cash Payments to Suppliers Cash payments (Equal to prior periods purchases) Expected 30th June balance of accounts payable (June purchases)
April 156,000
May 163,800
Quarter 491,790
BMAC 250
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7. Cash Budget Beginning cash balance Cash receipts (Part 5) Total cash available Cash Payments: Payments for merchandise (Part 6) Sales commissions (Part 3) Salaries: Sales (Part 3) Administrative (Part 4) Interest on long term note (Part 4) Dividends Equipment purchase Interest on short term notes: April (12,000 x 1.0%) June (6,099 x 1.0%) Total Cash Payments Preliminary balance Additional loan Loan repayment Ending cash balance: Ending short term notes
156,000 32,813
163,800 34,453
171,990 36,175
55,000
0 61 277,026 52,732
(12,000) 89,517 0
0 50,000 6,099
BMAC 250
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Operating expenses: Sales commissions (Part 3) Sales salaries (Part 3) Administrative salaries (Part 4) Depreciation (Part 4) Interest on long term note (Part 4) Interest on short term notes (Part 7) Total operating expenses: Income before income taxes Income taxes (35%) Net Income 103,441 11,500 24,000 15,000 5,400 181 159,522 171,488 60,021 111,467
BMAC 250
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