18. What is the balance of Accounts Payable on August 31, 2020?

multiple choice 18

• $ 9,240

• $ 6,324

• $13,628

• $ 7,304

• $11,000

19. What is the balance of Commissions Payable on July 31, 2020?

multiple choice 19

• $1,300

• $ 0

• $1,860

• $3,300

• $1,440

20. What is the balance of Dividends Payable on July 31, 2020?

multiple choice 20

• $ 5,113

• $10,000

• $ 3,695

• $ 0

• $ 5,000

21. What is the balance of Long-Term Debt on July 31, 2020?

multiple choice 21

• $73,941

• $ 7,000

• $70,000

• $ 5,924

• $77,000

22. What is the balance of Retained Earnings on August 31, 2020?

multiple choice 22

• $16,085

• $36,423

• $10,000

• 21,423

• $31,423

Browns Company Sales Budget S&A Expenses Budget July August September July August Variable Selling & Admin Expenses Credit Sales $ 48,000 $ 62,000 $ 84,000 Sales Commissions (4) Utilities Cash Receipts: Total Variable S&A Expenses 1,920 2,480 From Current Month Sales From Prior Month Sales Fixed Selling & Admin Expenses Total Cash Receipts (1) $ 58,500 Utilities Advertising 1,100 1,100 Salaries 1,400 1,400 Inventory Purchases Budget 900 900 Depreciation Insurance July August September (5) Total Fixed S&A Expenses 4,200 4,200 COGS $ 34,100 $ 46,200 Cash Payments for S&A Expenses Sales Commissions Desired Ending Inventory Total Inventory Needed Beginning Inventory Inventory Purchases Utilities 780 920 (2) $ 36,520 Advertising 1,100 1,100 Salaries 1,400 1,400 Cash Payments for Purchases Depreciation (6) For Current Month Purchases $ 25,296 Insurance (7) For Prior Month Purchases 11,000 Total Payments for S&A Expenses $ 16,580 $ 4,860 Total Cash Payments $ 36,296 (3) The information given below is the Browns Company's beginning balance sheet, estimates and policies, and the partially completed Master Budget for July and August. Use the information to answer the 22 Multiple Choice Questions, each asking for a missing number from the Master Budget. ASSETS Current Assets Cash Accounts Receivable Prepaid Insurance Inventory Total Current Assets Browns Company Balance Sheet As of June 30, 2020 LIABILITIES & STOCKHOLDERS' EQUITY Current Liabilities $ 5,000 Accounts Payable $ 11,000 15,000 Commissions Payable Income Taxes Payable 3,500 1,600 Dividends Payable 21,600 Total Current Liabilities 15,800 1,300 Long-term debt 70,000 Property Plant & Equipment Land Equipment Accumulated Depreciation Net PP & E 60,400 85,000 (22,000) 123,400 Stockholders' Equity Common Stock Retained Earnings Total Stockholders' Equity 49,200 10,000 59,200 Total Assets $ 145,000 Total Liabilities & SE $ 145,000 1. Expected sales are $48,000, $62,000, and $84,000, respectively in July, August, and September. All sales are on credit. 2. The company collects 75% of sales in the month of the sale and 25% in the month after the sale. 3. The cost of goods sold is equal to 55% of sales. 4. The company desires an ending inventory equal to 20% of the next month's cost of goods sold. 5. All purchases of inventory are on credit. The company pays for 80% of its purchases in the month of the purchase and 20% in the month after the purchase. 6. The company pays a 3% sales commission to its sales staff that is paid in the month after it is earned. 7. The company also incurs a utilities expense that is equal to $300 plus 1% of sales. This expense is paid in the month it is incurred. 8. Other Selling and Administrative Expenses, paid in the month they are incurred, include Advertising $1,100 per month, Salaries $1,400 per month and Depreciation $900 per month. 9. On July 1 the company purchased an insurance policy covering 24 months for $12,000. Balance Sheet July August July August ASSETS LIABILITIES & STOCKHOLDERS EQUITY Current Assets Current Liabilities Cash $ 6,324 (18) (12) (13) Accounts Receivable (19) 12,000 (14) Accounts Payable Commissions Payable Income Taxes Payable Dividends Payable Prepaid Insurance Inventory (15) (20) Total Current Assets Total Current Liabilities Property Plant & Equipment Long term debt (21) Stock Investment Land (16) Stockholders' Equity 85,000 85,000 Common Stock 49,200 49,200 Equipment Accumulated Depreciation (17) Retained Earnings (22) Total PP &E Total Stockholders Equity TOTAL ASSETS $ 158,744 $ 168,840 TOTAL LIABILITIES & STOCKHOLDERS EQUITY $ 158,744 $ 168,840 Cash Budget Income Statement July August July August $ 48,000 $ 62,000 Beginning Balance Sales Cash Receipts 58,500 Less: Variable Costs Total Cash Available 56,000 COGS Variable S&A Expenses Cash Payments: Contribution Margin (11) For Inventory Purchases 36,296 Less: Fixed Costs For S&A Expenses Fixed S&A Expenses Interest Expense For Interest (8) For Stock Investment Pre-tax Income $ 14,780 $ 20,450 For Land Less: Income Taxes 3,695 5,113 For Dividends Net Income $ 11,085 $ 15,338 For Taxes Total cash payments 57,076 (9) 8,059 Surplus/(Deficit) New Borrowing / (Repayment) Ending Cash Balance 7,000 (10) 5,000