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LimeLemon inc. Is a manufacturer of athletic wear for running and yoga. They sell premium athletic pants. LimeLemon Inc. has a March 31 year end.
| LimeLemon inc. Is a manufacturer of athletic wear for running and yoga. They sell premium athletic pants. LimeLemon Inc. has a March 31 year end. | ||||||
| Sales: Estimated Sales information for the upcoming fiscal year are as follows: | ||||||
| Month | Sales in Units | Sales Price Per Unit | ||||
| April | 430 | $72 | ||||
| May | 510 | $74 | ||||
| June | 490 | $75 | ||||
| July | 520 | $73 | ||||
| August | 280 | $72 | ||||
| Production: When creating the budget, management likes to have extra inventory on hand in the event that actual sales are higher than budgeted. | ||||||
| Ending inventory as a percentage of the following month's sales | 15% | |||||
| Ending inventory at March 31 in units | 150 | |||||
| Materials: Management budgets for extra materials in the event that there is a shortage from suppliers. | ||||||
| Ending material units as a percentage of the following month's production needs | 25% | |||||
| Ending materials at March 31 in yards | 350 | |||||
| Number of yards of material required per pair of pants produced | 2.75 | |||||
| Cost of material per yard | $11 | |||||
| Cash Sales vs. Credit Sales: LimeLemon's sales history indicates that sales are split between cash and credit as follows: | ||||||
| Percentage of total sales made up of cash sales | 30% | |||||
| Percentage of total sales made up of credit sales | 70% | |||||
| Collection data: LimeLemon has reviewed past collection history and has determined that credit sales will be collected as follows: | ||||||
| Credit sales collected in the month of the sale | 25% | |||||
| Credit sales collected in the month following the sale | 75% | |||||
| Credit sales for the month of March | $42,000 | |||||
| Payment data: LimeLemon will pay for its purchases on the following schedule: | ||||||
| Payments on purchases of materials in the month of the purchase | 60% | |||||
| Payments on purchases of materials in the month following the purchase | 40% | |||||
| Credit purchases for the month of March | $23,000 | |||||
| Cash flow information: LimeLemon has access to an open line of credit with the bank to borrow money if necessary. To keep things simple, ignore interest calculations of the bank borrowings. Also, loan borrowings and repayments are taken in $1,000 increments. LimeLemon maintains that it will pay repay debts as soon as possible with excess cash that becomes available. | ||||||
| Cash bank account balance at March 31 | $10,500 | |||||
| Minimum required cash bank account balance | $5,000 | |||||
| Budgeted Expenses: | April | May | June | |||
| Payment of operating expenses | $12,400 | $13,400 | $15,200 | |||
| Depreciation | $2,500 | $2,500 | $2,500 | |||
| Purchase of new equipment | $10,000 | $25,000 | $0 | |||
| Payment of cash dividends | $2,000 | $2,000 | $2,000 | |||
| Part a) Prepare the sales budget for the quarter ended June 30 | Additional notes as needed: | |||||
| Sales Budget For the quarter ended June 30, 20XX | ||||||
| April | May | June | Total | July | August | |
| Sales in units | ||||||
| Sales Price | ||||||
| Total Sales | ||||||
| Part b) Prepare the production budget for the quarter | ||||||
| Production Budget For the quarter ended June 30, 20XX | ||||||
| April | May | June | Total | July | August | |
| Budgeted Sales Volume in units (from sales budget) | ||||||
| Add: Budgeted Ending Inventory | ||||||
| Less: Budgeted Beginning Inventory | ||||||
| Budgeted Production Units | ||||||
| Part c) Prepare the direct materials purchases budget and a purchasing budget for the quarter | ||||||
| Direct Material Purchases Budget For the quarter ended June 30, 20XX | ||||||
| April | May | June | Total | July | August | |
| Budgeted production (# of pants) | ||||||
| Direct Materials per pair of pants | ||||||
| Budgeted Direct Materials to be Used (yards) | ||||||
| Add: Budgeted Ending Inventory | ||||||
| Less: Budgeted Beginning Inventory | ||||||
| Direct Materials to be Purchased (yards) | ||||||
| Purchasing Budget For the quarter ended June 30, 20XX | ||||||
| April | May | June | Total | |||
| Direct Materials to be Purchased (yards) | ||||||
| Budgeted Direct Material (cost/yard) | ||||||
| Budgeted Purchase Cost | ||||||
| Part d) Prepare a forecast of cash and credit sales for the quarter and a schedule of cash receipts for the quarter | ||||||
| Forecasted Cash Sales For the quarter ended June 30, 20XX | ||||||
| April | May | June | Total | |||
| Sales (taken from Sales Budget) | ||||||
| Cash Sales as a percentage of Total Sales | ||||||
| Credit Sales as a percentage of Total Sales | ||||||
| Schedule of Cash Receipts For the quarter ended June 30, 20XX | ||||||
| April | May | June | Total | |||
| Cash Sales | ||||||
| Cash collections on March credit sales | ||||||
| Cash collections on April credit sales | ||||||
| Cash collections on May credit sales | ||||||
| Cash collections on June credit sales | ||||||
| Total cash collections on credit sales | ||||||
| Total Cash Receipts | ||||||
| Part e) Prepare the schedule of cash disbursements for the quarter | ||||||
| Schedule of Cash Disbursements For the quarter ended June 30, 20XX | ||||||
| April | May | June | Total | |||
| Payment on March material purchases | ||||||
| Payment on April material purchases | ||||||
| Payment on May material purchases | ||||||
| Payment on June material purchases | ||||||
| Total Cash Disbursements | ||||||
| Part f) Prepare a cash budget for the first quarter | ||||||
| Cash Budget For the quarter ended June 30, 20XX | ||||||
| April | May | June | Total | |||
| Cash (Beginning) | ||||||
| Cash Receipts: | ||||||
| Cash Sales | ||||||
| Cash Collections on Credit Sales | ||||||
| Total Cash Available | ||||||
| Cash Disbursements: | ||||||
| Payments to supplies for material purchases | ||||||
| Payments on operating expenses | ||||||
| Capital expenditures | ||||||
| Dividends | ||||||
| Total Cash Disbursements | ||||||
| Cash Excess (Deficit) | ||||||
| Financing Requirements: | ||||||
| Amounts Borrowed | ||||||
| Amounts Repaid | ||||||
| Ending Cash | ||||||
| April | May | June | ||||
| Loan Balance | ||||||
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Survey of Accounting
Authors: Thomas Edmonds, Christopher, Philip Olds, Frances McNair, Bor
4th edition
77862376, 978-0077862374
