Assignment: Operating Budgeting

The following data pertains to XY Company

Budgeted sales for January 201X $200,000

The estimated increase in sales for the coming months 2%

Beginning inventory 20% of CGS

Cost of goods sold (variable) 60% of Sales

Other variable expenses 10% of Sales

Depreciation per month 10,000

Other fixed costs 20,000

Assume the following data for last December

Cash 2,000

Accounts Receivable 100,000

Long-term-assets (net) 1,000,000

Accounts payable 80,000

Long-term-debt 300,000

Other information:

Sales are collected as follows

In the month of sales 70%

In the following month 30%

Purchases are paid as follows

In the month of purchase 20%

In the following month 80%

All other expenses that require cash disbursements are paid as incurred. The minimum cash balance required at the end of each period is $2,000. Prepare: Purchase budget and cash budget for the first quarter.