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Developing a Master Budget for a Merchandising Organization Dils Brother Department Store prepares budgets quarterly. The following information is available for use in planning the

Developing a Master Budget for a Merchandising Organization

Dils Brother Department Store prepares budgets quarterly. The following information is available for use in planning the second quarter budgets for 2017.

Dils Brother Department Store Balance Sheet March 31, 2017
Assets Liabilities and Stockholders' Equity
Cash $ 4,000

Accounts payable

$31,000
Accounts receivable 31,000

Dividends payable

15,000
Inventory 36,000

Rent payable

3,000
Prepaid Insurance 3,000

Stockholders' equity

50,000
Fixtures 25,000
Total assets $99,000

Total liabilities and equity

$99,000

Actual and forecasted sales for selected months in 2017 are as follows:

Month Sales Revenue
January $ 70,000
February 60,000
March 50,000
April 60,000
May 70,000
June 80,000
July 100,000
August 90,000

Monthly operating expenses are as follows:

Wages and salaries $ 27,000
Depreciation 100
Utilities 1,500
Rent 3,000

Cash dividends of $15,000 are declared during the third month of each quarter and are paid during the first month of the following quarter. Operating expenses, except insurance, rent, and depreciation are paid as incurred. Rent is paid during the following month. The prepaid insurance is for five more months. Cost of goods sold is equal to 50 percent of sales. Ending inventories are sufficient for 120 percent of the next month's cost of sales. Purchases during any given month are paid in full during the following month. All sales are on account, with 50 percent collected during the month of sale, 40 percent during the next month, and 10 percent during the month thereafter. Money can be borrowed and repaid in multiples of $1,000 at an interest rate of 12 percent per year. The company desires a minimum cash balance of $4,000 on the first of each month. At the time the principal is repaid, interest is paid on the portion of principal that is repaid. All borrowing is at the beginning of the month, and all repayment is at the end of the month. Money is never repaid at the end of the month it is borrowed.

(a) Prepare a purchases budget for each month of the second quarter ending June 30, 2017.

Dils Brothers Department Store Monthly Purchase Budget Quarter Ending June 30, 2017
April May June Total
Budgeted purchases $Answer

$Answer

$Answer

$Answer

(b) Prepare a cash receipts schedule for each month of the second quarter ending June 30, 2017. Do not include borrowings.

Dils Brothers Department Store Schedule of Monthly Cash Receipts Quarter Ending June 30, 2017
April May June Total
Total cash receipts $Answer

$Answer

$Answer

$Answer

(c) Prepare a cash disbursements schedule for each month of the second quarter ending June 30, 2017. Do not include repayments of borrowings.

Dils Brothers Department Store Schedule of Monthly Cash Disbursements Quarter Ending June 30, 2017
April May June Total
Total cash disbursements $Answer

$Answer

$Answer

$Answer

(d) Prepare a cash budget for each month of the second quarter ending June 30, 2017. Include budgeted borrowings and repayments.

Only use negative signs, if needed, for: excess receipts over disbursements, balance before borrowings and cash balances (beginning and ending).

Dils Brothers Department Store Monthly Cash Budget Quarter Ending June 30, 2017
April May June Total
Cash balance, beginning $Answer

$Answer

$Answer

$Answer

Receipts Answer

Answer

Answer

Answer

Disbursements Answer

Answer

Answer

Answer

Excess receipts over disb. Answer

Answer

Answer

Answer

Balance before borrowings Answer

Answer

Answer

Answer

Borrowings Answer

Answer

Answer

Answer

Loan repayments Answer

Answer

Answer

Answer

Cash balance, ending $Answer

$Answer

$Answer

$Answer

(e) Prepare an income statement for each month of the second quarter ending June 30, 2017.

Only use negative signs to show net losses for income.

Dils Brothers Department Store Budgeted Monthly Income Statements Quarter Ending June 30, 2017
April May June Total
Sales $Answer

$Answer

$Answer

$Answer

Cost of sales Answer

Answer

Answer

Answer

Gross profit Answer

Answer

Answer

Answer

Operating expenses:
Wages and salaries Answer

Answer

Answer

Answer

Depreciation Answer

Answer

Answer

Answer

Utilities Answer

Answer

Answer

Answer

Rent Answer

Answer

Answer

Answer

Insurance Answer

Answer

Answer

Answer

Interest Answer

Answer

Answer

Answer

Total expenses Answer

Answer

Answer

Answer

Net income $Answer

$Answer

$Answer

$Answer

(f) Prepare a budgeted balance sheet as of June 30, 2017.

Dils Brothers Department Store Budgeted Balance Sheet June 30, 2017
Assets Liabilities and Equity
Cash $Answer

Merchandise payable $Answer

Accounts receivable Answer

Dividend payable Answer

Inventory Answer

Rent payable Answer

Prepaid insurance Answer

Loans payable Answer

Fixtures Answer

Interest payable Answer

Total assets $Answer

Stockholders' equity Answer

Total liab. & equity $Answer

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