EBZ Fashion is preparing a quarterly budget covering the 3 months ending 30 September 2020. The information
Question:
EBZ Fashion is preparing a quarterly budget covering the 3 months ending 30 September 2020.
The information available for the budget is as follows.
1. Cash sales represent 80% of all monthly sales; credit sales are collected in the month after sale.
2. Inventory purchases that are made on account equal 60% of the sales forecast for that month;
30% of the purchases are paid for in the month of purchase, and 70% are paid for in the following month.
3. Ending inventory on 30 September 2020 is projected to be $57 800.
4. Equipment purchases at the end of September are budgeted at $95 000.
5. Other quarterly expenses are budgeted as follows: administration expenses, $14 700; utilities,
$55 000; salaries, $154 000; stationery, $4800. These expenses are paid when incurred.
6. Depreciation for the quarter is $18 000.
7. The balance sheet as at 1 July 2020 will have the following account balances.
8. Budgeted sales are: July, $255 000; August, $272 000; September, $330 000.
Required
(a) Prepare a budgeted income statement and balance sheet for the quarter ending 30 September 2020. Ignore income tax.
Step by Step Answer:
Accounting
ISBN: 9780730363224
10th Edition
Authors: John Hoggett, John Medlin, Keryn Chalmers, Beattie Claire, Hellmann Andreas, Maxfield Jodie