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Posted on Sep 15, 2024

4. What is Total Commissions Expense Expense for July? $1,920 $ 0 $1,860 $3,300 $1,440 5. What is Total Insurance Expense for July? $12,000 $

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4. What is Total Commissions Expense Expense for July?

$1,920
$ 0
$1,860
$3,300
$1,440

5. What is Total Insurance Expense for July?

$12,000
$ 0
$1,000
$1,500
$ 500

6. What is the Total Cash Payment for Depreciation Expense for July?

$1,800
$ 0
$22,900
$ 900
$21,100

7. What is Total Cash Payment for Insurance Expense for August?

$ 0

$12,000
$ 500
$ 1,500
$1,000

8. What is Total Interest Expense for July?

$ 0
$1,400
$ 700
$7,000
$2,100

9. What is Total Cash Surplus (Deficit) for July?

$(7,576)
$ 5,924
$8,059
$(1,076)
$1,076

10. What is Total Net Borrowing (Repayment) for August?

$ 7,000
$ 0
$ 3,059
$ (3,059)
$(8,059)

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. 10. The company pays interest on its long-term debt at the end of each month. Interest is equal to 1% of the balance of long-term debt at the beginning of the month. 11. On August 10 the company will pay cash for Land, costing $6,500. 12. On July 27 the company will declare a cash dividend of $5,000 and will pay it in August. 13. The company requires a minimum cash balance of $5,000 and will use any cash surplus to pay down long-term debt. The company borrows cash in $1,000 increments. 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)