b. Actual sales for December and budgeted sales for the next four months are as follows: per month, shipping, 5% of sales, depreciation, $14,000 per month; other expenses, 3% of sales. g. One-half of a month's inventory purchases are paid for in the month of purchase; the other half are paid 1. Prepare the following by quarter and in local a. A schedule of expected cash collections. 2. Compute the expected cash payments for operating expenses, by quarter and in total, for the year 2012) b. A schedule of budgeted cash disbursements for merchandise purchases. 3. Prepare a cash budget, by quarter and in total, for the year 2020. In your budget, clearly show the quarter(s) in which borrowing will be necessary and the quarter(s) in which repayments can be wale 4. Consider the cash balance at the end of the fourth quarter as calculated in Requirement (3). Recakula c. Sales are 20% for cash and 80% on credit. All payments on credit sales are collected in the month following sale. The comeceivable at December 31 are a result of December credit sales. f. At the end of each month, inventory is to be on hand equal to 25% of the following month's sales needs c. Monthly expenses are budgeted as follows: salaries and wages, $27,000 per month; advertising. $70,000 requested by the company's bank. the ending balance if of principal can be in round $100 1 2 3 4. 5. 6. PROBLEM 7-7 Comprehensive Master Budget (LO2 - CC5, 7, 11, 12, LO3 - CC13, 14] PR Pre Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basi The following data have been assembled to assist in preparation of the master budget for the first quarter a. As of December 31 (the end of the prior quarter), the company's general ledger showed the following Foll 000 ang account balances Debits Credits Cash Accounts receivable Inventory Buildings and equipment (net) Accounts payable Capital shares $ 48,000 224,000 60,000 370,000 Retained earnings $ 93,000 500,000 109,000 $702,000 a. Gro b. Actu $702,000 December (actual) January February March April $280,000 400,000 600,000 300,000 200,000 d. The company's gross margin is of . c. Sales The ac 4. At the stated c. One-ha in the fi stated at cost. for in the following month. 1. Month expense Depreci 8. Equipm The com localho Budgeting 5. Income statement for the quarter ending March 31 as shown in Schedule 9 in the chapter Preparing a Comprehensive Master Budget [LO2- CC5, 7, 11, 12; L03 - CC13, 14) Following is selected information relating to the operations of Shilow Company, a wholesale distributor h. During February, the company will purchase a new copy machine for $1,700 cash. During Murch, wher equipment will be purchased for cash at a cost of $84,500 i. During January, the company will declare and pay $45,000 in cash dividends. j. The company must maintain a minimum cash balance of $30,000. An open line of credit is available at a local bank for any borrowing that may be needed during the quarter. All borrowing is done at the beginning of a month, and all repayments are made at the end of a month. Borrowings and repayments of principal must be in multiples of $1,000. Interest is paid only at the time of payment of principal. The annual interest rate is 12%. (Figure interest on whole months, e.g., 1/12, 2/12.) Required: Using the preceding data, complete the following statements and schedules for the first quarters 1. Schedule of expected cash collections. 2. Inventory purchases budget. 3. a. Schedule of cash disbursements for purchases. b. Schedule of cash disbursements for expenses, 6. Balance sheet as of March 31. 12 4. Cash budget PROBLEM 7-8 CHECK FIGURE (2) May purchase $64.800 14) May 31 cash balance: $4 Current assets as of March 31: $ 8,000 20,000 36.000 Cash Accounts receivable Inventory Plant and equipment, net Accounts payable Capital shares Retained earnings 120,000 21.750 150,000 12.250
