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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:
As of December the end of the prior quarter the companys general ledger showed the following account balances:
Debits Credits
Cash $
Accounts receivable
Inventory
Buildings and equipment net
Accounts payable $
Capital shares
Retained earnings
$ $
Actual sales for December and budgeted sales for the next four months are as follows:
December actual $
January
February
March
April
Sales are for cash and on credit. All payments on credit sales are collected in the month following sale. The accounts receivable at December are a result of December credit sales.
The companys gross margin is of sales.
Monthly expenses are budgeted as follows: salaries and wages, $ per month; advertising, $ per month; shipping, of sales; depreciation, $ per month; other expenses, of sales.
At the end of each month, inventory is to be on hand equal to of the following months sales needs, stated at cost
Onehalf of a months inventory purchases are paid for in the month of purchase; the other half are paid for in the following month.
During February, the company will purchase a new copy machine for $ cash. During March, other equipment will be purchased for cash at a cost of $
During January, the company will declare and pay $ in cash dividends.
The company must maintain a minimum cash balance of $ 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 $ Interest is paid only at the time of payment of principal. The annual interest rate is Figure interest on whole months, eg
Required:
Using the preceding data, complete the following statements and schedules for the first quarter:
Schedule of expected cash collections.
a Inventory purchases budget.
b Schedule of cash disbursements for purchases.
Schedule of cash disbursements for expenses.
Cash budget. Roundup "Borrowing" and "Repayments" answers to the nearest whole dollar amount. Any "Repayments" and "Interest" should be indicated by a minus sign.
Prepare an income statement for the quarter ending March
Prepare a balance sheet as of March
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