Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Brin Inc., an office supplies specialty store, prepares its master budget on a quarterly basis. The following data have been assembled to assist in preparation
Brin Inc., an office supplies specialty store, prepares its master budget on a quarterly basis. 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 account balances: b. Actual sales for December and budgeted sales for the next four months are as follows: c. Sales are 20% for cash and 80% on credit. All payments on credit sales are collected in the month following sale. The accounts receivable at December 31 are a result of December credit sales. b. Actual sales for December and budgeted sales for the next four months are as follows: c. Sales are 20% for cash and 80% on credit. All payments on credit sales are collected in the month following sale. The accounts receivable at December 31 are a result of December credit sales. d. The company's gross margin is 40% of sales. e. Monthly expenses are budgeted as follows: salaries and wages, $27,000 per month; advertising, $67,000 per month; shipping, 5% of sales; depreciation, $12,000 per month; other expenses, 3% of sales. f. At the end of each month, inventory is to be on hand equal to 25% of the following month's sales needs, stated at cost. g. One-half of a month's inventory purchases are paid for in the month of purchase; the other half are paid for in the following month. h. During February, the company will purchase a new copy machine for $1,000 cash. During March, other equipment will be purchased for cash at a cost of $80,000. i. During January, the company will declare and pay $47,000 in cash dividends. j. The company must maintain a minimum cash balance of $31,000. 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 quarter: 1. Schedule of expected cash collections. Required: Using the preceding data, complete the following statements and schedules for the first quarter: 1. Schedule of expected cash collections. 2-a. Inventory purchases budget. 2-a. Inventory purchases budget. 2-b. Schedule of cash disbursements for purchases. 3. Schedule of cash disbursements for expenses. 4. Cash budget. (Roundup "Borrowing" and "Repayments" answers to the nearest whole dollar amount. Any "Repayments" and "Interest" should be indicated by a minus sign.) \begin{tabular}{|c|c|c|c|c|} \hline \multicolumn{5}{|c|}{ Brin Inc. } \\ \hline \multicolumn{5}{|c|}{ Cash Budget } \\ \hline & January & February & March & Quarter \\ \hline \multicolumn{5}{|l|}{ r } \\ \hline \multicolumn{5}{|l|}{ C } \\ \hline Total cash available & 0 & 0 & 0 & 0 \\ \hline \multicolumn{5}{|l|}{ Deduct: Disbursements: } \\ \hline \multicolumn{5}{|c|}{7} \\ \hline \multicolumn{5}{|c|}{77} \\ \hline \multicolumn{5}{|l|}{7} \\ \hline \multicolumn{5}{|l|}{7} \\ \hline \multicolumn{5}{|l|}{F} \\ \hline Total disbursements & 0 & 0 & 0 & 0 \\ \hline \multicolumn{5}{|c|}{ Excess (deficiency) of cash } \\ \hline \multicolumn{5}{|l|}{ Financing: } \\ \hliner & & & & \\ \hline 7 & & & & \\ \hline & & & & \\ \hline 7 & & & & \\ \hline Total financing & 0 & 0 & 0 & 0 \\ \hline F & & & & \\ \hline \end{tabular} 5. Prepare an income statement for the quarter ending March 31. \begin{tabular}{|l|l|l|} \hline \multicolumn{2}{|c|}{ Brin Inc. } \\ \hline \multicolumn{2}{|c|}{ Income Statement } \\ \hline For the Quarter Ended March 31 \\ \hline & & \\ \hline & & \\ \hline Goods available for sale & & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline \end{tabular} 6. Prepare a balance sheet as of March 31 . \begin{tabular}{|l|l|l|} \hline \multicolumn{2}{|c|}{ Brin Inc. } \\ \hline \multicolumn{1}{|c|}{ As of March 31 } \\ \hline Assets & \\ \hline \hline & & \\ \hline \hline & & \\ \hline Torrent assets: & & \\ \hline & 0 \\ \hline \hline \multicolumn{2}{|c|}{ Liabilities and Shareholders' Equity } & \\ \hline Total assets & & \\ \hline & & \\ \hline Current liabilities: & & \\ \hline & & \\ \hline \hline & & \\ \hline Stockholders' equity: & & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline \end{tabular} \begin{tabular}{|l|l|l|} \hline \multicolumn{2}{|c|}{ Aalance Sheet } \\ \hline \multicolumn{2}{|c|}{ As of March 31 } \\ \hline Current assets: & & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline Total current assets & & \\ \hline & \\ \hline Current liabilities: & \\ \hline & & \\ \hline & & \\ \hline Stockholders' equity: & & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline Total shareholders' equity & & \\ \hline \hline \end{tabular}
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started