Developing a Master Budget for a Merchandising Organization Peyton Department Store prepares budgets quarterly. The following information is available for use in planning the second quarter budgets for 2010. PEYTON DEPARTMENT STORE Balance Sheet March 31, 2010 Assets Liabilities and Stockholders' Equity Cash $2,000 Accounts payable |$26,000 Accounts receivable 25,000 Dividends payable 17,000 Inventory 30,000 Rent payable 1,000 Prepaid Insurance 2,000 Stockholders' equity 40,000 Fixtures 25,000 Total assets $84,000 Total liabilities and equity $84,000 Actual and forecasted sales for selected months in 2010 are as follows: Month Sales Revenue January $80,000 February 50,000 March 40,000 April 50,000 May 60,000 June 70,000 July 90,000 August 80,000 Monthly operating expenses are as follows: Wages and salaries $27,000 Depreciation 100 Utilities 1,000 Rent 1,000(a) Prepare a purchases budget for each month of the second quarter ending June 30, 2010. Peyton Department Store Monthly Purchase Budget Quarter Ending June 30, 2010 April May June Tota Budgeted purchases $ 31,000 $ 36,000 v $ 47,000 * $ 114,000 (b) Prepare a cash receipts schedule for each month of the second quarter ending June 30, 2010. Do not include borrowings. Peyton Department Store Schedule of Monthly Cash Receipts Quarter Ending June 30, 2010 April May June Total Total cash receipts $ 46,000 $ 54,000 $ 64,000 * $ 164,000 (c) Prepare a cash disbursements schedule for each month of the second quarter ending June 30, 2010. Do not include repayments of borrowings. Peyton Department Store Schedule of Monthly Cash Disbursements Quarter Ending June 30, 2010 April May June Total Total cash disbursements $ 77,000 * $ 65,000 * $ 66,000 x $ 200,000 x (d) Prepare a cash budget for each month of the second quarter ending June 30, 2010. 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). Peyton Department Store Monthly Cash Budget Quarter Ending June 30, 2010 April May June Total Cash balance, beginning $ 2,000 * $ 2,000 * $ 2,000 * $ 2,000 Receipts 46,000 54,000 64,000 164,000 Disbursements 0 x 0 x 0 x 0 X Excess receipts over disb. 0 X O X 0 X 0 X Balance before borrowings 0 X 0 X O X O X Borrowings 25,000 x 5,000 x 0 X 30,000 x Loan repayments 0 V 0 v Cash balance, ending $ 2,000 * $ 2,000 * $ 2,000 * $ 2,000(e) Prepare an income statement for each month of the second quarter ending June 30, 2010. Only use negative signs to show net losses in income. Peyton Department Store Budgeted Monthly Income Statements Quarter Ending June 30, 2010 April May June Total Sales $ 50,000 * $ 60,000 * $ 70,000 * $ 180,000 Cost of sales 25,000 30,000 v 35,000 v 90,000 Gross profit 25,000 30,000 35,000 90,000 Operating expenses: Wages and salaries 27,000 27,000 27,000 81,000 Depreciation 100 100 100 300 Utilities 1,000 1,000 1,000 3,000 v Rent 1,000 1,000 1,000 3,000 Insurance 400 400 400 1,200 Interest 250 x 300 x 300 x 850 x Total expenses 0 X 0 X 0 X 0 X Net income $ (3,750) * $ 1,200 * $ 6,200 * $ 3,650 x (f) Prepare a budgeted balance sheet as of June 30, 2010. Peyton Department Store Budgeted Balance Sheet June 30, 2010 Assets Liabilities and Equity Cash $ 2,000 * Merchandise payable $ 47,000 Accounts receivable 41,000 Dividend payable 30,000 x Inventory 54,000 Rent payable 1,000 Prepaid insurance 800 Loans payable 30,000 x Fixtures 24,700 Interest payable 850 X Total assets $ 122,500 Stockholders' equity 40,000 x Total liab. & equity $ 122,500