Exercise 7-9 Budgeted Balance Sheet [LO7-10]

The management of Mecca Copy, a photocopying center located on University Avenue, has compiled the following data to use in preparing its budgeted balance sheet for next year:

	Ending Balances
Cash		?
Accounts receivable	$	9,500
Supplies inventory	$	3,400
Equipment	$	41,000
Accumulated depreciation	$	16,600
Accounts payable	$	3,200
Common stock	$	5,000
Retained earnings		?

The beginning balance of retained earnings was $31,000, net income is budgeted to be $21,400, and dividends are budgeted to be $3,900.

Required:

Prepare the companys budgeted balance sheet. (Amounts to be deducted should be indicated by a minus sign.)

Mecca Copy
Budgeted Balance Sheet
Assets
Current assets:
Total current assets		$0
Plant and equipment:
Plant and equipment, net		0
Total assets		$0
Liabilities and Stockholders' Equity
Current liabilities:
Stockholders' equity:
Total stockholders' equity		0
Total liabilities and stockholders' equity		$0

Problem 7-19A Schedules of Expected Cash Collections and Disbursements [LO7-2, LO7-4, LO7-8]

You have been asked to prepare a December cash budget for Ashton Company, a distributor of exercise equipment. The following information is available about the companys operations:

a.	The cash balance on December 1 is $47,000.
b.	Actual sales for October and November and expected sales for December are as follows:

	October		November		December
Cash sales	$	83,000	$	79,000	$	85,600
Sales on account		500,000		624,000		674,000

	Sales on account are collected over a three-month period as follows: 20% collected in the month of sale, 60% collected in the month following sale, and 18% collected in the second month following sale. The remaining 2% is uncollectible.
c.	Purchases of inventory will total $372,000 for December. Thirty percent of a months inventory purchases are paid during the month of purchase. The accounts payable remaining from Novembers inventory purchases total $189,500, all of which will be paid in December.
d.	Selling and administrative expenses are budgeted at $502,000 for December. Of this amount, $69,000 is for depreciation.
e.	A new web server for the Marketing Department costing $88,500 will be purchased for cash during December, and dividends totaling $14,500 will be paid during the month.
f.	The company maintains a minimum cash balance of $20,000. An open line of credit is available from the companys bank to bolster the cash position as needed.

Required:
1.	Prepare a schedule of expected cash collections for December.

Ashton Company
Schedule of Expected Cash Collections
December cash sales
Collections on account:
October sales
November sales
December sales
Total cash collections	$0

2.

Prepare a schedule of expected cash disbursements for merchandise purchases for December.

Ashton Company
Schedule of Expected Cash Disbursements
Payments to suppliers:
November purchases
December purchases
Total cash payments	$0

3.

Prepare a cash budget for December. Indicate in the financing section any borrowing that will be needed during the month. Assume that any interest will not be paid until the following month.

Ashton Company
Cash Budget
For the Month of December
Beginning cash balance
Add collections from customers
Total cash available		0
Less cash disbursements:
Payments to suppliers for inventory
Selling and administrative expenses
New web server
Dividends paid
Total cash disbursements		0
Excess (deficiency) of cash available over disbursements		0
Financing:
Borrowings
Repayments
Interest
Total financing		0
Ending cash balance		$0