Fill out the purchase budget and the cash budget using the information below :

PURCHASES BUDGET :

PLANNING FOR 2017

Actual

Budgeted

Budgeted

Budgeted

Dec 2016

January

February

March

Desired Ending Inventory Balance for Current Month

$104,160

Current Month's Cost of Sales

124,000

Inventory Needed to be Available during Current Month

228,160

Less: Beginning Inventory of Current Month

86,800

Budgeted Purchase for Next Month Sales

$141,360

PLANNED CASH TRANSACTIONS and CASH BUDGET

For the Month Ending,

Jan 31, 2017

Feb 28, 2017

Mar 31, 2017

CASH IN

48% This Month's Sales

52% of Last Month's Sales

Total Cash Receipts

CASH OUT

75% Last Month's Purchases

25% This Month's Purchases

Commissions

Advertising

Selling & Admin.

Insurance

Interest

Dividends

Income Tax

Total Cash Disbursements

CASH BUDGET

Beginning Balance of Cash

Cash Receipts

Cash Available

Cash Disbursements

Ending Cash Balance

Use this information:

PLANNING DATA FOR 2017

All Sales are on Credit

Collections of Accounts Receivable:

Month of Service

48.00%

Month following Service

52.00%

Actual December 2016 Sales

$200,000

Expected Sales in Dollars

January

$240,000

February

$195,000

March

$175,000

April

$210,000

Cost of Goods Sold as a percentage of selling price.

62.00%

Planned ending inventory as a percentage of next month's required inventory.

70.00%

Purchases are are all on credit.

Purchases paid in current month

25.00%

Purchases paid in next month

75.00%

Actual Purchases made in December 2016

$137,800

Sales commission as a percent of sales

2.50%

Sales commission are paid one month after the month incurred.

Advertising expenses have a fixed and variable portion:

Fixed portion

$4,400

The fixed portion of the advertising is paid in the current month.

Variable portion as a percentage of sales

1.00%

The variable portion is paid one month after the month incurred.

Insurance policy:

Months of insurance coverage paid for

12

The policy period is from March 1 to February 28 each year

The premium to be paid on March 1, 2017 is

$2,100

The premium will be charged to prepaid insurance

Selling and Administrative expenses have a fixed and variable portion:

Fixed portion is paid in the month incurred

$26,000

Variable portion as a percentage of sales

3.00%

S&A expenses are paid one month after the month incurred

Depreciation expense per month

$4,600

The annual interest rate on the long term debt is

4.50%

Interest is incurred on the principal balance outstanding each month.

Interest is paid on a quarterly basis. Interest for November to January will be paid February 1.

No principal payments are scheduled to be made on the long-term debt until August of 2017

Income Tax rate

30%

Accrued taxes are paid on the 15th of January, April, July and October

The Company's Board of Directors plans to declare a dividend on February 20

$11,000

It will be paid on March 15.

BALANCE SHEET
December 31, 2016
ASSETS
Current Assets
Cash	$108,200
Accounts Receivable	104,000
Inventory	104,160
Prepaid Insurance	350
Total Current Assets	316,710
Property Plant and Equipment
Office Equipment	276,000
Accumulated Depreciation	(55,200)
Total Property Plant and Equipment	220,800
Total Assets	$537,510
LIABILITIES AND SHAREHOLDERS EQUITY
LIABILITIES
Current Liabilities
Accounts Payable - Purchases	$103,350
Sales Commission Payable	5,000
Selling and Admin Payable	6,000
Advertising Payable	2,000
Interest Payable	1,313
Dividends Payable	-
Income Taxes Payable	15,530
Total Current Liabilities	133,193
Long Term Debt	175,000
Total Liabilities	308,193
SHAREHOLDERS' EQUITY
Common Stock	140,000
Retained Earnings	89,318
Total Shareholders' Equity	229,318
Total Liabilities and Shareholders Equity	$537,510