A B D E F G H T Balance Sheet October 31 Assets Cash Accounts Receivable (net of allowance for 5% uncollectible accounts) Merchandise inventory Property, plant and equipment (net of $500,000 accumulated depreciation Total Assets $ $ $ $ $ 16,000 74,000 140,400 1,066,000 1,296,400 Liabilities and Stockholders' Equity Accounts Payable Common Stock Retained Earnings Total liabilites and stockholders' equity $ $ $ $ 240,000 640,000 416,400 1,296,400 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 a) 32 33 34 35 36 37 38 39 40 41 ADDITIONAL INFORMATION: Sales are budgeted at $360,000 for November, $380,000 for December, and $350,000 for January. Collections are expected to be 75% in the month of sale, 20% in the month following the sale, and 5% uncollectible. Prepare a Schedule of Expected Cash Collections for November and December. November December January Budgeted Sales Schedule of Expected Cash Collections November December Accounts Receivable November Sales December Sales Total Cash Collections (Receipts) ADDITIONAL INFORMATION The cost of goods sold is 65% of sales. The company desires an ending merchandise inventory equal to 60% of the cost of goods sold in the following month. 42 43 44 45 46 47 48 49 50 b) 51 52 53 54 55 56 57 58 Prepare a Merchandise Purchases Budget for November and December. November December January Budgeted Cost of Goods Sold Add desired ending merchandising inventory Total needs Less beginning merchandise inventory Required purchases B C D E F G T Prepare a Merchandise Purchases Budget for November and December. November December January Budgeted Cost of Goods Sold Add desired ending merchandising inventory Total needs Less beginning merchandise inventory Required purchases 49 50 b) 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 c. 73 74 ADDITIONAL INFORMATION Merchandising Inventory is purchased on credit (Accounts Payable) 100% Payment for merchandise is made in the month following the purchase. Other monthly expenses to be paid in cash are $21,900 for November and December. The company desires a minimum cash balance of $50,000 each month. It will finance or borrow short term only only of the minimum balance is not maintained each month. November December Cash disbursements for merchandise Other monthly cash expenses Total Cash disbursements November December 75 76 77 78 79 80 81 82 83 84 Prepare Cash Budgets for November and December. CASH BUDGET: Beginning cash balance Add cash receipts Total cash available Less cash disbursements Excess (deficiency) of cash available over disbursements Financing Ending cash balance ADDITIONAL INFORMATION Monthly depreciation is $20,000. Assume zero taxes as simplifying assumption. Prepare Budgeted Income Statements for November and December 85 86 d. 87 88 89 November December 90 91 92 93 94 95 96 97 Budgeted Income Statements Sales Cost of goods sold Gross margin Bad debt expense Other monthly expenses Depreciation Net operating income Bad debt expense is the 5% of uncollectab 98 A B C D E F H I ) K Monthly depreciation is $20,000. Assume zero taxes as simplifying assumption. Prepare Budgeted Income Statements for November and December 83 84 85 86 d. 87 88 89 90 November December Budgeted Income Statements Sales Cost of goods sold Gross margin Bad debt expense Other monthly expenses Depreciation Net operating income Bad debt expense is the 5% of uncollectable sales Prepare a Budgeted Balance Sheet for the end of December 91 92 93 94 or 95 DE 96 7 97 98 98 99 e. e 100 1901 101 102 103 104 10+ 105 100 106 107 * 108 109 Balance Sheet December 31 Assets Cash Accounts receivable Inventory Property, plant and equipment (net of Total assets accumulated depreciation) Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings Total liabilities and stockholders' equity 110 111 112 113 114 115 . 116 117 110 118 119 120 121 122 123 124 125 126 127 128 129 130 131 132 133
