\f\fTotal I 70 1 0 {21212 LE 1 5 3:212; Cash, Ending $50,000 $50,000 $94,700 Noi $170,000 X 1% X 3 =$5,100 $10,000 X 1% X 2 = 200 Total interest M 3/ Knockoffs Unlimited Budgeted Income Statement Three Months Ended June 30 Sales $2,150,000 Variable Expenses: Cost of goods sold $860'000 ($4/unit) Commissions M (m (4% of Sales) CM $1,204,000 Fixed Expenses: Advertising ($200000 X 3) $600,000 Rent ($18000 X 3) $54,000 Wages and salaries ($106000 X 3) $318,000 Utilities ($7000 X 3) $21,000 Insurance ($3000 X 3) $9,000 Depreciation ($14000 X 3) mace 1 44 Operating Income $ 160,000 Interest expense 5 00 Net income $154,700 4/ Knockoffs Unlimited Budget Balance Sheet 30Jut1 Assets Cash $94,700 Accounts receivable 500,000 Inventory 48,000 Prepaid insurance 12,000 Fixed assets w Total assets $1,618, 200 W 135 3001 $94,700 Prepaid insurance 12,000 Fixed assets 964 000 Total assets $1,618,100 Liabilities and Shareholders' Equity Accounts payable $84,000 Dividends payable 15,000 Common shares 800,000 Retained earnings M Total $1.l, 200 Not: Accounts receivable at June 30: 10% X May sales of$l,000,000 $100,000 80% X June sales of$500,000 499.01!) Total $500,000 Retained earnings at Jun 30 Balance 580,000 Net Income 114M Total 734,700 Dividends 15,900) Balance June $719,700 Knockoffs Limited, as their name suggests, is a distributor of knockoff designer necklaces. Like many other production companies, they build up large inventories in preparation for the following months sales. They pay for half of their purchases in the month bought, and the remainder in the following month, All of their sales are made on credit, and they usually receive at least 20% of within the month and the remainder in the following month' Since there is a high demand due to Mother's Day, they expect to increase sales in May. 1) The nature of business is any organization that uses resources to meet the needs of customers by providing products or services that they demand, usually with the intention of making a prot, Where the organizations rst need to have a budget on how many resources (Inputs) do they need, in order to produce goods (Outputs) which are demanded by the customers, And as example of Knockoffs Unlimited, a nationwide distributor (CASE 9-27) which requires to create a Master budget for the three-month period ending June 30, where the budget including schedules of sales, cash collections, merchandise purchases, expected cash disbursements for merchandise purchases, income Stalememb 80% X June sales of$500,000 4110M Total $500,000 Retained earnings at Jun 30 Balance 580,000 Net Income 15AM Total 734,700 Dividends aim Balance June $719,700 Knockoffs Limited, as their name suggests, is a distributor of knockoff designer necklaces. Like many other production companies, they build up large inventories in preparation for the following months sales. They pay for half of their purchases in the month bought, and the remainder in the following month All of their sales are made on credit, and they usually receive at least 20% of within the month and the remainder in the following month. Since there is a high demand due to Mother's Day, they expect to increase sales in May. 1) The nature of business is any organization that uses resources to meet the needs of customers by providing products or services that they demand, usually with the intention of making a prot. Where the organizations rst need to have a budget on how many resources (Inputs) do they need, in order to produce goods (Outputs) which are demanded by the customers. And as example of Knockoffs Unlimited, a nationwide distributor (CASE 9-27) which requires to create a Master budget for the three-month period ending June 30, where the budget including schedules of sales, cash collections, merchandise purchases, expected cash disbursements for merchandise purchases, income statement, and balance sheet. 2) The followings are list of strategies on action plan: Identify how much sales does the company has to obtain. Measure the amount of cash will be collected from the sales. Figure out certain numbers of merchandises the company needs to purchase. Sum-up the operating expenses of both departments buying in and selling out the merchandises. - Match the revenue and expenses for the period. 0... 3) Expect more percentage of cash collections from sales in the period, and also wish to lower the advertising cost in the upcoming period. Objectives are the most important thing to give direction to a business. Running a business without goals is like running a race without planned route. It is likely to fail because there's no clear understanding of what the business is to achieve. Every business must make a plans or strategies in order to achieve those goals. And every planning process begins with budgets because it serves as both planning tool especially in nancial goals and control tool in organizations to review actual performance against business goals. List of action: All individuals in the organization must be cooperate top management and lower levels. These may also motivate everyone in achieving business goals. Budgets must be reviewed not only top management but everyone in the organization and issues must be resolved by mutual decisions. All individuals must help each other to solve problems to avoid future loss. Although budgeting is a simple list of planned, protability, cash and capital; budgeting estimated sales, marketing, production, inventory, payroll, operating expenses, xed assets purchases and cash needed and potential sources. Budgeting is very important in business without it there's no future and success in business