create a master budget

The information given below is Bobcats Company's beginning balance sheet, estimates and policies, and the partially completed Master Budget for January and February. Use the information to answer the 22 Multiple Choice Questions, each asking for a missing number from the Master Budget. Round all your computations to the nearest dollar. 1. Sales are expected to be $80,200 in January, $100,200 in February, and $105,200 in March 2. All sales are on credit and it collects 20% of all sales in the month of the sale, the remaining 80% in the month after the sale. 3. The cost of goods sold is equal to 40% of sales. 4. The company likes to keep an ending inventory on hand equal to 15% of next month's cost of goods sold. 5. All purchases of inventory are on account, and the company pays for 60% of all purchases in the month of the purchase, 40% in the month after the purchase. 6. The company pays its sales force a commission equal to 3% of sales. 7. The company also believes that its miscellaneous expense is equal to $500 plus 2% of sales. 8. Rent is $2.000 per month, Supplies are $600 per month and Depreciation is $1,800 per month. 9. On January 1st, the company purchased an insurance policy covering 24 months for $28,800, 10. All selling and administrative expenses are paid in the month they are incurred except for commissions that are paid in the month after they are earned and the insurance which is paid two year in advance. 11. The company purchased $4,000 of Land on February 18th. They paid cash for the land. 12. Interest on long-term debt is equal to 1% of the beginning balance and is paid each month. The company must maintain a minimum balance in cash of $15,000 and will use any cash surplus to pay down long-term debt. The company borrows cash in $1,000 increments. 13. The company is subject to a 30% income tax rate. The company pays income taxes in the month after they are accrued (expensed). 14. The company's Board of Directors declared a cash dividend of $950 on January 4th. The dividend will be paid on February 10th. 15. The company had a beginning balance sheet (as of January 1) as follows: Assets Liabilities & SE Current Assets Current Liabilities Cash $16,000 Accounts Payable $23,500 Accounts Receivable 48,000 Commissions Payable 3,400 Prepaid Insurance O Income Taxes Payable 9.275 Inventory 9.600 Dividends Payable 0 Total Current Assets 73,600 Total Current Liabilities 36,175 Assets Current Assets Cash Accounts Receivable Prepaid Insurance Inventory Total Current Assets Liabilities & SE Current Liabilities $16,000 Accounts Payable 48,000 Commissions Payable O Income Taxes Payable 9,600 Dividends Payable 73,600 Total Current Liabilities $23,500 3,400 9,275 0 36,175 Long-term Debt 80,000 Property, Plant & Equipment Equipment Land Accumulated Depreciation Net PPE 95,000 Stockholders Equity 8,800 Common Stock _(25,000) Return Earnings 78,800 Total SE 26,225 10.000 36,225 Total Assets $152,400 Total Liabilities & SE $152,400 Babcats Company's partically completed master budget is as follows: Sales Budget January $80,200 February $100,200 March $105,200 Credit Sales Cash Receipts from Customers From Current Month Credit Sales From Prior Month Credit Sales Total Cash Receipts from Customers (1) Inventory Purchases Budget January February $40,080 March $42,080 COGS Desired Ending Inventory Total INventory Needed Beginning Inventory Inventory Purchases (2) Cash Payments for Inventory Purchases For Current Month Purchases For Prior Month Purchases Total Cash Payments for Inventory Purchases $40,595 (3) Selling & Administrative Expenses Budget January February (4) Variable Selling & Administrative Expenses Commissions Miscellaneous Total Variable S&A Expenses 4,010 5,010 2,000 2,000 Fixed Selling & Administrative Expenses Miscellaneous Rent Supplies Depreciation Insurance Total Fixed S&A Expenses 1,800 1,800 (5) $6,100 $6,100 Cash Payments for S&A Expenses ITARRA Insurance Total Fixed S&A Expenses (5) $6,100 $6,100 Cash Payments for S&A Expenses Commissions Utilities Advertising Salaries Depreciation Insurance Total Cash Payments for S&A Expenses (6) (7) $36,904 $7,510 Cash Budget January February Beginning Cash Balance Cash Receipts from Customers Total Cash Available 80,040 40,595 (8) Cash Payments For Inventory Purchases For S&A Expenses For Interest For Income Taxes For Land Purchase For Dividends Total Cash Payments 87,574 (9) 39,388 Surplus (Deficit) Borrowing (Repayment) Ending Cash Balance (10) $ 15,000 Income Statement January $80,200 February $100,200 (11) Sales Less: Variable Expenses COGS Variable S&A Expenses Contrinbution Margin Less: Fixed Expenses Fixed S&A Expenses Interest Expense Pre-tax Net Income Income Taxes Expense After-tax Net Income 11,163 $26.047 14,394 $33,586 (18) Balance Sheet Assets Current Assets Cash Accounts Receivable Prepaid Insurance Inventory Total Current Assets (12) (13) Liabilities & SE Current Liabilities Accounts Payable Commissions Payable Income Taxes Payable Dividends Payable Total Current Liabilities (19) (14) (15) (20) Long-term Debt (21) 95,000 26,225 Property, Plant & Equipment Equipment Land Accumulated Depreciation Net PPE Total Assets 95.000 Stockholders Equity (16) Common Stock Retum Earnings Total SE $207,072 Total Liabilities & SE 26,225 (22) (17) $207,072 $190,238 $190,238