Question
I need help in solving this budget case. Crowne store has the following sales revenue data available on April 1. Feb $299,000 (actual) Mar $286,000
I need help in solving this budget case.
Crowne store has the following sales revenue data available on April 1.
Feb $299,000 (actual)
Mar $286,000 (actual)
April $312,000 (budgeted)
May $286,000 (budgeted)
June $299,000 (budgeted)
July $312,000 (budgeted)
Aug $338,000 (budgeted)
Store sells 60% on the account and the remaining on cash. The collection pattern of the receivable are as follows:
60% collected in the month of sale
30% collected in the following month
9% collected in the second month following the sale
1% uncollectible bad debt
All items are sold at a price of $10 per unit. Inventory levels in units at the end of each month should be equal to the next month sales needs. Units cost around 65% of sales price. All purchases of inventory in a month are paid in the following month. Other expenses are budgeted as follows:
FIXED $65,000 per month, which includes $15,600 of depreciation
Variable 10% of sales revenue
All these expenses are paid in the month incurred.
The balance sheet accounts balance on 3/31 are as follows:
Cash $104,000
Accounts receivable (net of uncollectible) $138,450
Inventory $295,750
Fixed assets (net of accumulated depreciation) $390,000
Accounts payable (from inventory purchase) $194,350
Common stock $260,000
Retained earnings $473,850
Company budgets to pay $80,000 of dividend on 6/30.
REQUIRED:
Hint: you need to calculate the sales units for each month.
- A schedule of cash collection for each month of quarter 2
- A schedule of inventory purchases for each month of quarter 2
- A schedule of cash payments for each month of quarter 2.
- A cash budget for each month of quarter 2.
- Budgeted income statement for the period ending quarter 2
- Balance sheet as of June 30.
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