On July 1, MTC Wholesalers had a cash balance of $175,000 and accounts payable of $99,000. Actual sales for May and June, and budgeted sales for July, August, September, and October are:

Month

Actual Sales

Month

Budgeted Sales

May

$150,000

July

$ 90,000

June

160,000

August

80,000

September

100,000

October

120,000

All sales are on credit with 75 percent collected during the month of sale, 20 percent collected during the next month, and 5 percent collected during the second month following the month of sale. Cost of goods sold averages 70 percent of sales revenue. Ending inventory is one-half of the next month's predicted cost of sales. The other half of the merchandise is acquired during the month of sale. All purchases are paid for in the month after purchase. Operating costs are estimated at $28,000 each month and are paid during the month incurred.

Required

Prepare purchases and cash budgets for July, August, and September.

Do notuse a negative sign with your answers.

MTC Wholesalers

Purchases Budget

For the Months of July, August, and September

July

August

September

Inventory required, current sales

$Answer

$Answer

$Answer

Desired ending inventory

Answer

Answer

Answer

Total inventory needs

Answer

Answer

Answer

Less beginning inventory

Answer

Answer

Answer

Purchases

$Answer

$Answer

$Answer

Do notuse a negative sign with your answers.

MTC Wholesalers

Cash Budget

For the Months of July, August, and September

July

August

September

Cash balance, beginning

$Answer

$Answer

$Answer

Cash receipts

Current month's sales

Answer

Answer

Answer

Previous month's sales

Answer

Answer

Answer

Sales two months prior

Answer

Answer

Answer

Total receipts

Answer

Answer

Answer

Cash available

Answer

Answer

Answer

Cash disbursements:

Purchases

Answer

Answer

Answer

Operating costs

Answer

Answer

Answer

Total disbursements

Answer

Answer

Answer

Cash balance, ending

$Answer

$Answer

$Answer

2. Production and Purchases Budgets

At the beginning of October, Comfy Cushions had 1,600 cushions and 10,500 pounds of raw materials on hand. Budgeted sales for the next three months are:

Month

Sales

October

8,000 cushions

November

10,000 cushions

December

13,000 cushions

Comfy Cushions wants to have sufficient raw materials on hand at the end of each month to meet 25 percent of the following month's production requirements and sufficient cushions on hand at the end of each month to meet 20 percent of the following month's budgeted sales. Five pounds of raw materials, at a standard cost of $0.90 per pound, are required to produce each cushion.

Required

a. Make a production budget for October and November.

Do notuse a negative sign with your answers.

Comfy Cushions

Production Budget

For the Months of October and November

October

November

December

Unit Sales

Answer

Answer

Answer

Desired ending inventory

Answer

Answer

Finished goods requirements

Answer

Answer

Less beginning inventory

Answer

Answer

Production requirements

Answer

Answer

b. Make a purchases budget in units and dollars for October.

Do notuse a negative sign with your answers.

Comfy Cushions

Purchases Budget

For the Month of October

October

November

Production requirements

Answer

Answer

Desired ending inventory

Answer

Raw materials requirements

Answer

Less beginning inventory

Answer

Purchase requirements (units)

Answer

Purchase requirements (in dollars)

$Answer

3.

Cash Disbursement

Timber Company is in the process of preparing its budget for next year. Cost of goods sold has been estimated at 70 percent of sales. Lumber purchases and payments are to be made during the month preceding the month of sale. Wages are estimated at 15 percent of sales and are paid during the month of sale. Other operating costs amounting to 10 percent of sales are to be paid in the month following the month of sale. Additionally, a monthly lease payment of $14,000 is paid for computer services. Sales revenue is forecast as follows

Month

Sales Revenue

February

$170,000

March

210,000

April

220,000

May

260,000

June

240,000

July

280,000

Required

Make a schedule of cash disbursements for April, May, and June.

Do notuse a negative sign with your answers.

Timber Company

Schedule of Cash Disbursements

April, May, and June

April

May

June

Lumbers purchases

$Answer

$Answer

$Answer

Wages

Answer

Answer

Answer

Operating expenses

Answer

Answer

Answer

Lease payment

Answer

Answer

Answer

Total disbursements

$Answer

$Answer

$Answer

4. Purchases Budget in Units and Dollars

Budgeted sales of Wirtz Music Shop for the first six months of 2017 are as follows:

Month

Unit Sales

Month

Unit Sales

January

155,000

April

240,000

February

185,000

May

205,000

March

225,000

June

265,000

Beginning inventory for 2017 is 35,000 units. The budgeted inventory at the end of a month is 40 percent of units to be sold the following month. Purchase price per unit is $5.

Make a purchases budget in units and dollars for each month, January through May.

WIRTZ MUSIC SHOP

Purchases Budget

January - May, 2017

January

February

March

April

May

Purchase units:

Answer

Answer

Answer

Answer

Answer

Purchase dollars:

$Answer

$Answer

$Answer

$Answer

$Answer

5. Cash Budget

Patrick's Retail Company is planning a cash budget for the next three months. Estimated sales revenue is as follows:

Month

Sales Revenue

Month

Sales Revenue

January

$ 350,000

March

$ 250,000

February

300,000

April

200,000

All sales are on credit; 60 percent is collected during the month of sale, and 40 percent is collected during the next month. Cost of goods sold is 80 percent of sales. Payments for merchandise sold are made in the month following the month of sale. Operating expenses total $52,000 per month and are paid during the month incurred. The cash balance on February 1 is estimated to be $35,000.

Prepare monthly cash budgets for February, March, and April.

Use negative signs only with beginning and ending cash balances, when appropriate. Do not use negative signs with disbursement answers.

Patrick's Retail Company

Cash Budgets

February, March, and April

February

March

April

Cash balance, beginning

$Answer

$Answer

$Answer

Total Cash receipts

Answer

Answer

Answer

Cash available

Answer

Answer

Answer

Total disbursements

Answer

Answer

Answer

Cash balance, ending

$Answer

$Answer

$Answer

6.

The Williams Supply Company sells for $40 one product that it purchases for $25. Budgeted sales in total dollars for next year are $1,400,000. The sales information needed for preparing the July budget follows:

Month

Sales Revenue

May

$ 34,000

June

48,000

July

56,000

August

64,000

Account balances at July 1 include these:

Cash

$ 24,000

Merchandise inventory

17,500

Accounts receivable (sales)

25,760

Accounts payable (purchases)

16,250

The company pays for one-half of its purchases in the month of purchase and the remainder in the following month. End-of-month inventory must be 50 percent of the budgeted sales in units for the next month. A 2 percent cash discount on sales is allowed if payment is made during the month of sale. Experience indicates that 50 percent of the billings will be collected during the month of sale, 40 percent in the following month, 8 percent in the second following month, and 2 percent will be uncollectible. Total budgeted selling and administrative expenses (excluding bad debts) for the fiscal year are estimated at $210,000 , of which one-half is fixed expense (inclusive of a $21,000 annual depreciation charge). Fixed expenses are incurred evenly during the year. The other selling and administrative expenses vary with sales. Expenses are paid during the month incurred. (Round your answers to the nearest whole number.)

(a) Make a schedule of estimated cash collections for July.

WilliamsSupply Company

Schedule of Cash Collections

For the Month of July

Current month's sales

$Answer

Previous month's sales

$Answer

Two months' prior sales

$Answer

Total cash collections

$Answer

(b) Make a schedule of estimated July cash payments for purchases. For this, perform your calculation using units rounding up to the nearest whole unit. Then convert to dollars for your answer.

WilliamsSupply Company

Schedule of Cash Payments for Purchases

For the Month of July

Current month's purchases

$Answer

Beginning accounts payable

Answer

Total cash payments

$Answer

(c) Create schedules of July selling and administrative expenses, separately identifying those requiring cash disbursements.

WilliamsSupply Company

Schedule of Selling and Administrative Expenses and Cash Disbursements

For the Month of July

Total

Cash

Selling and administrative expenses:

Fixed

$Answer

Cash payment

$Answer

Variable

Answer

Answer

Total expenses and cash disbursements

$Answer

$Answer

(d)Make a cash budget in summary form for July.

Do not use negative signswith any answers below.

WilliamsSupply Company

Cash Budget

For the Month of July

Cash receipts

$Answer

Cash disbursements:

Merchandise

$Answer

Selling and administrative

Answer

Answer

Excess receipts (disbursements)

$Answer

7. Developing a Master Budget for a Merchandising Organization

Dils Brother Department Store prepares budgets quarterly. The following information is available for use in planning the second quarter budgets for 2017.

Dils Brother Department Store

Balance Sheet

March 31, 2017

Assets

Liabilities and Stockholders' Equity

Cash

$4,000

Accounts payable

$31,000

Accounts receivable

31,000

Dividends payable

15,000

Inventory

36,000

Rent payable

3,000

Prepaid Insurance

3,000

Stockholders' equity

50,000

Fixtures

25,000

Total assets

$99,000

Total liabilities and equity

$99,000

Actual and forecasted sales for selected months in 2017 are as follows:

Month

Sales Revenue

January

$ 70,000

February

60,000

March

50,000

April

60,000

May

70,000

June

80,000

July

100,000

August

90,000

Monthly operating expenses are as follows:

Wages and salaries

$ 27,000

Depreciation

100

Utilities

1,500

Rent

3,000

Cash dividends of $15,000 are declared during the third month of each quarter and are paid during the first month of the following quarter. Operating expenses, except insurance, rent, and depreciation are paid as incurred. Rent is paid during the following month. The prepaid insurance is for five more months. Cost of goods sold is equal to 50 percent of sales. Ending inventories are sufficient for 120 percent of the next month's cost of sales. Purchases during any given month are paid in full during the following month. All sales are on account, with 50 percent collected during the month of sale, 40 percent during the next month, and 10 percent during the month thereafter. Money can be borrowed and repaid in multiples of $1,000 at an interest rate of 12 percent per year. The company desires a minimum cash balance of $4,000 on the first of each month. At the time the principal is repaid, interest is paid on the portion of principal that is repaid. All borrowing is at the beginning of the month, and all repayment is at the end of the month. Money is never repaid at the end of the month it is borrowed.

(a) Make a purchases budget for each month of the second quarter ending June 30, 2017.

Dils Brothers Department Store

Monthly Purchase Budget

Quarter Ending June 30, 2017

April

May

June

Total

Budgeted purchases

$Answer

$Answer

$Answer

$Answer

(b) Make a cash receipts schedule for each month of the second quarter ending June 30, 2017. Do not include borrowings.

Dils BrothersDepartment Store

Schedule of Monthly Cash Receipts

Quarter Ending June 30, 2017

April

May

June

Total

Total cash receipts

$Answer

$Answer

$Answer

$Answer

(c) Make a cash disbursements schedule for each month of the second quarter ending June 30, 2017. Do not include repayments of borrowings.

Dils BrothersDepartment Store

Schedule of Monthly Cash Disbursements

Quarter Ending June 30, 2017

April

May

June

Total

Total cash disbursements

$Answer

$Answer

$Answer

$Answer

(d) Make a cash budget for each month of the second quarter ending June 30, 2017. Include budgeted borrowings and repayments.

Only use negative signs, if needed, for:excess receipts over disbursements, balance before borrowings andcash balances (beginning and ending).

Dils BrothersDepartment

Store Monthly Cash Budget

Quarter Ending June 30, 2017

April

May

June

Total

Cash balance, beginning

$Answer

$Answer

$Answer

$Answer

Receipts

Answer

Answer

Answer

Answer

Disbursements

Answer

Answer

Answer

Answer

Excess receipts over disb.

Answer

Answer

Answer

Answer

Balance before borrowings

Answer

Answer

Answer

Answer

Borrowings

Answer

Answer

Answer

Answer

Loan repayments

Answer

Answer

Answer

Answer

Cash balance, ending

$Answer

$Answer

$Answer

$Answer

(e) Make an income statement for each month of the second quarter ending June 30, 2017.

Only usenegative signsto shownet losses for income.

Dils BrothersDepartment Store

Budgeted Monthly Income Statements

Quarter Ending June 30, 2017

April

May

June

Total

Sales

$Answer

$Answer

$Answer

$Answer

Cost of sales

Answer

Answer

Answer

Answer

Gross profit

Answer

Answer

Answer

Answer

Operating expenses:

Wages and salaries

Answer

Answer

Answer

Answer

Depreciation

Answer

Answer

Answer

Answer

Utilities

Answer

Answer

Answer

Answer

Rent

Answer

Answer

Answer

Answer

Insurance

Answer

Answer

Answer

Answer

Interest

Answer

Answer

Answer

Answer

Total expenses

Answer

Answer

Answer

Answer

Net income

$Answer

$Answer

$Answer

$Answer

(f) Make a budgeted balance sheet as of June 30, 2017.

Dils BrothersDepartment Store

Budgeted Balance Sheet

June 30, 2017

Assets

Liabilities and Equity

Cash

$Answer

Merchandise payable

$Answer

Accounts receivable

Answer

Dividend payable

Answer

Inventory

Answer

Rent payable

Answer

Prepaid insurance

Answer

Loans payable

Answer

Fixtures

Answer

Interest payable

Answer

Total assets

$Answer

Stockholders' equity

Answer

Total liab. & equity

$Answer