Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Following is selected information relating to the operations of Kelly Company, a wholesale distributor: a. Gross margin is 25% of sales. b. Actual and budgeted

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Following is selected information relating to the operations of Kelly Company, a wholesale distributor: a. Gross margin is 25% of sales. b. Actual and budgeted sales data are as follows: c. Sales are 60% for cash and 40% on credit. Credit sales are collected in the month following sale. The accounts receivable at March 31 are a result of March credit sales: d. At the end of each month, inventory is to be on hand equal to 80% of the following month's sales needs, stated at cost. e. One-half of a month's inventory purchases are paid for in the month of purchase; the other half are paid for in the following month. The accounts payable at March 31 are a result of March purchases of inventory. f. Monthly expenses are as follows; salaries and wages, 12% of sales, rent, $5,000 per month: other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $1.500 per month (includes depreciation on new assets) 9. Equipment costing $2.100 will be purchased for cash in April. h. The company must maintain a minimum cash balance of $6,000. An open line of credit is avaitable at a focal bank. All borrowing is done at the beginning of a month, and all repayments are made at the end of a month, borrowing must be in multiples of $1.000. The annual interest rate is 12% Interest is paid only at the time of repayment of principal, figure. interest on whole months (1/12, 2/12, and so forth) annual interest rate is 12%. Interest is paid only at the time of repayment of principal; figure interest on whole months (1/12,2/12, and so forth). Required: Using the preceding data: 1. Prepare a schedule of expected cash collections. 2. Prepare a schedule of inventory purchases and a schedule of expected cash disbursements for purchases. 3. Prepare a schedule of expected cash disbursements for operating expenses. 4. Prepare a cash budget by month and for the quarter in total. (Any "Repayments" and "Interest" should be indicated by a minus sign.) 5. Prepare an income statement for the quarter ended June 30. 6. Prepare a balance sheet as of June 30

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Horngrens Cost Accounting A Managerial Emphasis

Authors: Srikant Datar, Madhav Rajan

16th Global Edition

1292211547, 9781292211541

More Books

Students also viewed these Accounting questions

Question

Why are so many people afraid of communication?

Answered: 1 week ago