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Developing a Master Budget for a Merchandising Organization-(Answered)

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Developing a Master Budget
for a Merchandising Organization
Peyton Department Store prepares budgets quarterly. The following information is available for use in planning the second quarter budgets for 2010.

Cash $2,000 Accounts payable $26,000
Accounts receivable 25,000 Dividends payable 17,000
Inventory 30,000 Rent payable 1,000
Prepaid Insurance 2,000 Stockholders' equity 40,000
Fixtures 25,000 ? ?
Total assets $84,000 Total liabilities and equity $84,000


?

Actual and forecasted sales for selected months in 2010 are as follows:

January $70,000
February 50,000
March 40,000
April 50,000
May 60,000
June 70,000
July 90,000
August 80,000


?

Monthly operating expenses are as follows:

Wages and salaries $26,000
Depreciation 100
Utilities 1,000
Rent 1,000


?

Cash dividends of $17,000 are declared during the third month of each quarter and are paid during the first month of the following quarter. Operating expenses, except insurance, rent, and depreciation are paid as incurred. Rent is paid during the following month. The prepaid insurance is for five more months. Cost of goods sold is equal to 50 percent of sales. Ending inventories are sufficient for 120 percent of the next month's sales. Purchases during any given month are paid in full during the following month. All sales are on account, with 50 percent collected during the month of sale, 40 percent during the next month, and 10 percent during the month thereafter. Money can be borrowed and repaid in multiples of $1,000 at an interest rate of 12 percent per year. The company desires a minimum cash balance of $2,000 on the first of each month. At the time the principal is repaid, interest is paid on the portion of principal that is repaid. All borrowing is at the beginning of the month, and all repayment is at the end of the month. Money is never repaid at the end of the month it is borrowed.

(a) Prepare a purchases budget for each month of the second quarter ending June 30, 2010.

Budgeted purchases $Answer
$Answer
$Answer
$Answer


?

(b) Prepare a cash receipts schedule for each month of the second quarter ending June 30, 2010. Do not include borrowings.

Only use negative signs, if needed, for:?excess receipts over disbursements, balance before borrowings and?cash balances (beginning and ending).?

Total cash receipts $Answer
$Answer
$Answer
$Answer


?

(c) Prepare a cash disbursements schedule for each month of the second quarter ending June 30, 2010. Do not include repayments of borrowings.

Total cash disbursements $Answer
$Answer
$Answer
$Answer


?

(d) Prepare a cash budget for each month of the second quarter ending June 30, 2010. Include budgeted borrowings and repayments.

Cash balance, beginning $Answer
$Answer
$Answer
$Answer
Receipts Answer
Answer
Answer
Answer
Disbursements Answer
Answer
Answer
Answer
Excess receipts over disb. Answer
Answer
Answer
Answer
Balance before borrowings Answer
Answer
Answer
Answer
Borrowings Answer
Answer
Answer
Answer
Loan repayments Answer
Answer
Answer
Answer
Cash balance, ending $Answer
$Answer
$Answer
$Answer


?

(e) Prepare an income statement for each month of the second quarter ending June 30, 2010.

Only use negative signs to show net losses in income.

Sales $Answer
$Answer
$Answer
$Answer
Cost of sales Answer
Answer
Answer
Answer
Gross profit Answer
Answer
Answer
Answer
Operating expenses: ? ? ? ?
Wages and salaries Answer
Answer
Answer
Answer
Depreciation Answer
Answer
Answer
Answer
Utilities Answer
Answer
Answer
Answer
Rent Answer
Answer
Answer
Answer
Insurance Answer
Answer
Answer
Answer
Interest Answer
Answer
Answer
Answer
Total expenses Answer
Answer
Answer
Answer
Net income $Answer
$Answer
$Answer
$Answer


?

(f) Prepare a budgeted balance sheet as of June 30, 2010.

Cash $Answer
Merchandise payable $Answer
Accounts receivable Answer
Dividend payable Answer
Inventory Answer
Rent payable Answer
Prepaid insurance Answer
Loans payable Answer
Fixtures Answer
Interest payable Answer
Total assets $Answer
Stockholders' equity Answer
? ? Total liab. & equity $Answer


?


Developing a Master Budget

 

for a Merchandising Organization

 


 

Peyton Department Store prepares budgets quarterly. The following information is available for use in planning the second quarter...

 

Paper#9210919 | Written in 27-Jul-2016

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