Problem 7-5A Preparation of a complete master budget L.O. C2, P1, P2 [The following information applies to the questions displayed below.] Near the end of 2011, the management of Simid Sports Co., a merchandising company, prepared the following estimated balance sheet for December 31, 2011. SIMID SPORTS COMPANY Estimated Balance Sheet December 31, 2011 Assets Cash $ 36,000 Accounts receivable 520,000 Inventory 165,000 Total current assets 721,000 Equipment $ 542,000 Less accumulated depreciation 67,750 474,250 Total assets $ 1,195,250 Liabilities and Equity Accounts payable $ 340,000 Bank loan payable 15,000 Taxes payable (due 3/15/2012) 88,000 Total liabilities $ 443,000 Common stock 472,500 Retained earnings 279,750 Total stockholders? equity 752,250 Total liabilities and equity $ 1,195,250 To prepare a master budget for January, February, and March of 2012, management gathers the following information. a. Simid Sports? single product is purchased for $30 per unit and resold for $56 per unit. The expected inventory level of 5,500 units on December 31, 2011, is more than management?s desired level for 2012, which is 20% of the next month?s expected sales (in units). Expected sales are: January, 7,750 units; February, 9,000 units; March, 10,750 units; and April, 10,000 units. b. Cash sales and credit sales represent 30% and 70%, respectively, of total sales. Of the credit sales, 68% is collected in the first month after the month of sale and 32% in the second month after the month of sale. For the December 31, 2011, accounts receivable balance, $130,000 is collected in January and the remaining $390,000 is collected in February. c. Merchandise purchases are paid for as follows: 20% in the first month after the month of purchase and 80% in the second month after the month of purchase. For the December 31, 2011, accounts payable balance, $80,000 is paid in January and the remaining $260,000 is paid in February. d. Sales commissions equal to 20% of sales are paid each month. Sales salaries (excluding commissions) are $48,000 per year. e. General and administrative salaries are $156,000 per year. Maintenance expense equals $1,900 per month and is paid in cash. f. Equipment reported in the December 31, 2011, balance sheet was purchased in January 2011. It is being depreciated over eight years under the straight-line method with no salvage value. The following amounts for new equipment purchases are planned in the coming quarter: January, $36,000; February, $96,000; and March, $28,000. This equipment will be depreciated under the straight-line method over eight years with no salvage value. A full month?s depreciation is taken for the month in which equipment is purchased. g. The company plans to acquire land at the end of March at a cost of $150,000, which will be paid with cash on the last day of the month. h. Simid Sports has a working arrangement with its bank to obtain additional loans as needed. The interest rate is 12% per year, and interest is paid at each month-end based on the beginning balance. Partial or full payments on these loans can be made on the last day of the month. The company has agreed to maintain a minimum ending cash balance of $59,350 in each month. i. The income tax rate for the company is 32%. Income taxes on the first quarter?s income will not be paid until April 15. Required: Prepare a master budget for each of the first three months of 2012; include the following component budgets: references 2.value: 1.00 points Problem 7-5A Part 1 1. Monthly sales budgets. (Omit the "$" sign in your response.) SIMID SPORTS CO. Sales Budget January, February, and March 2012 Budgeted Units Budgeted Unit Price Budgeted Total Dollars January 2012 $ $ February 2012 March 2012 Total for the first quarter $ check my workeBook Links (3)references 3.value: 2.00 points Problem 7-5A Part 2 2. Monthly merchandise purchases budgets. (Units to be deducted should be indicated with a minus sign. Omit the "$" & "%" signs in your response.) SIMID SPORTS CO. Merchandise Purchases Budget January, February, and March 2012 January February March Total % % % $ $ $ $ $ $ $ $ check my workeBook Links (3)references 4.value: 2.00 points Problem 7-5A Part 3 3. Monthly selling expense budgets. (Omit the "$" & "%" signs in your response.) SIMID SPORTS CO. Selling Expense Budget January, February, and March 2012 January February March Total $ $ $ % % % $ Total selling expenses $ $ $ $ check my workeBook Links (3)references 5.value: 2.00 points Problem 7-5A Part 4 4. Monthly general and administrative expense budgets. (Do not round your intermediate calculations. Round your final answers to the nearest whole dollar. Omit the "$" sign in your response.) SIMID SPORTS CO. General and Administrative Expense Budget January, February, and March 2012 January February March Total $ $ $ $ Total expenses $ $ $ $ check my workeBook Links (3)references 6.value: 1.00 points Problem 7-5A Part 5 5. Monthly capital expenditures budgets. (Leave no cells blank - be certain to enter "0" wherever required. Input all amounts as positive values. Omit the "$" sign in your response.) SIMID SPORTS CO. Capital Expenditures Budget January, February, and March 2012 January February March $ $ $ Total $ $ $ check my workeBook Links (3)references 7.value: 2.00 points Problem 7-5A Part 6 6. Monthly cash budgets. (Leave no cells blank - be certain to enter "0" wherever required. Input all amounts as positive values except negative preliminary cash balance and repayment of loan to bank which should be indicated by a minus sign. Round your intermediate calculations and final answers to the nearest dollar amount. Omit the "$" sign in your response.) SIMID SPORTS CO. Cash Budget January, February, and March 2012 January February March $ $ $ Total cash available Cash disbursements Total cash disbursements $ $ $ $ $ $ check my workeBook Links (3)references 8.value: 2.00 points Problem 7-5A Part 7 7. Budgeted income statement for the entire first quarter (not for each month). (Round your answers to the nearest dollar amount. Input all amounts as positive values. Omit the "$" sign in your response.) SIMID SPORTS CO. Budgeted Income Statement For Three Months Ended March 31, 2012 $ Operating expenses $ $

Problem 7-5A Preparation of a complete master budget L.O. C2, P1, P2 [The following information applies to the questions displayed below.] Near the end of 2011, the management of Simid Sports Co., a merchandising company, prepared the following estimated balance sheet for December 31, 2011. SIMID SPORTS COMPANY Estimated Balance Sheet December 31, 2011 Assets Cash Accounts receivable Inventory Total current assets Equipme nt Less accumulat ed depreciatio n $ 520,000 165,000 721,000 $ 542,000 67,750 Total assets Liabilities and Equity Accounts payable Bank loan payable 36,000 474,250 $1,195,250 $ 340,000 15,000 Taxes payable (due 3/15/2012) Total liabilities Common stock Retained earnings 88,000 $ 443,000 472,500 279,750 Total stockholde rs' equity 752,250 Total liabilities and equity $1,195,250 To prepare a master budget for January, February, and March of 2012, management gathers the following information. a. Simid Sports' single product is purchased for $30 per unit and resold for $56 per unit. The expected inventory level of 5,500 units on December 31, 2011, is more than management's desired level for 2012, which is 20% of the next month's expected sales (in units). Expected sales are: January, 7,750 units; February, 9,000 units; March, 10,750 units; and April, 10,000 units. b. Cash sales and credit sales represent 30% and 70%, respectively, of total sales. Of the credit sales, 68% is collected in the first month after the month of sale and 32% in the second month after the month of sale. For the December 31, 2011, accounts receivable balance, $130,000 is collected in January and the remaining $390,000 is collected in February. c. Merchandise purchases are paid for as follows: 20% in the first month after the month of purchase and 80% in the second month after the month of purchase. For the December 31, 2011, accounts payable balance, $80,000 is paid in January and the remaining $260,000 is paid in February. d. Sales commissions equal to 20% of sales are paid each month. Sales salaries (excluding commissions) are $48,000 per year. e. General and administrative salaries are $156,000 per year. Maintenance expense equals $1,900 per month and is paid in cash. f. Equipment reported in the December 31, 2011, balance sheet was purchased in January 2011. It is being depreciated over eight years under the straight-line method with no salvage value. The following amounts for new equipment purchases are planned in the coming quarter: January, $36,000; February, $96,000; and March, $28,000. This equipment will be depreciated under the straight-line method over eight years with no salvage value. A full month's depreciation is taken for the month in which equipment is purchased. g. The company plans to acquire land at the end of March at a cost of $150,000, which will be paid with cash on the last day of the month. h. Simid Sports has a working arrangement with its bank to obtain additional loans as needed. The interest rate is 12% per year, and interest is paid at each month-end based on the beginning balance. Partial or full payments on these loans can be made on the last day of the month. The company has agreed to maintain a minimum ending cash balance of $59,350 in each month. i. The income tax rate for the company is 32%. Income taxes on the first quarter's income will not be paid until April 15. Required: Prepare a master budget for each of the first three months of 2012; include the following component budgets: references 2. value: 1.00 points Problem 7-5A Part 1 1. Monthly sales budgets. (Omit the "$" sign in your response.) January 2012 February 2012 SIMID SPORTS CO. Sales Budget January, February, and March 2012 Budgeted Budgeted Units Unit Price $ Budgeted Total Dollars $ March 2012 Total for the first quarter $ check my workeBook Links (3)references 3. value: 2.00 points Problem 7-5A Part 2 2. Monthly merchandise purchases budgets. (Units to be deducted should be indicated with a minus sign. Omit the "$" & "%" signs in your response.) January SIMID SPORTS CO. Merchandise Purchases Budget January, February, and March 2012 February % % March Total % $ $ $ $ $ $ $ $ check my workeBook Links (3)references 4. value: 2.00 points Problem 7-5A Part 3 3. Monthly selling expense budgets. (Omit the "$" & "%" signs in your response.) January SIMID SPORTS CO. Selling Expense Budget January, February, and March 2012 February $ $ % March Total $ % % $ Total selling expenses check my workeBook Links (3)references $ $ $ $ 5. value: 2.00 points Problem 7-5A Part 4 4. Monthly general and administrative expense budgets. (Do not round your intermediate calculations. Round your final answers to the nearest whole dollar. Omit the "$" sign in your response.) SIMID SPORTS CO. General and Administrative Expense Budget January, February, and March 2012 January February March Total $ Total expenses $ $ $ $ $ $ $ check my workeBook Links (3)references 6. value: 1.00 points Problem 7-5A Part 5 5. Monthly capital expenditures budgets. (Leave no cells blank - be certain to enter "0" wherever required. Input all amounts as positive values. Omit the "$" sign in your response.) SIMID SPORTS CO. Capital Expenditures Budget January, February, and March 2012 January February March $ Total $ $ $ $ $ check my workeBook Links (3)references 7. value: 2.00 points Problem 7-5A Part 6 6. Monthly cash budgets. (Leave no cells blank - be certain to enter "0" wherever required. Input all amounts as positive values except negative preliminary cash balance and repayment of loan to bank which should be indicated by a minus sign. Round your intermediate calculations and final answers to the nearest dollar amount. Omit the "$" sign in your response.) SIMID SPORTS CO. Cash Budget January, February, and March 2012 January February $ Total cash available Cash disbursements March $ $ Total cash disbursements $ 8. value: 2.00 points Problem 7-5A Part 7 $ $ check my workeBook Links (3)references $ $ $ 7. Budgeted income statement for the entire first quarter (not for each month). (Round your answers to the nearest dollar amount. Input all amounts as positive values. Omit the "$" sign in your response.) SIMID SPORTS CO. Budgeted Income Statement For Three Months Ended March 31, 2012 $ Operating expenses $ $ 9. value: Exercise 7-3 Preparation of a cash budget L.O. P1 Use the following information to prepare the July cash budget for Sanchez Co. It should show expected cash receipts and cash disbursements for the month and the cash balance expected on July 31. (Input all amounts as positive values. Omit the "$" sign in your response.) a. Beginning cash balance on July 1: $68,000. b. Cash receipts from sales: 15% is collected in the month of sale, 50% in the next month, and 35% in the second month after sale (uncollectible accounts are negligible and can be ignored). Sales amounts are: May (actual), $1,730,000; June (actual), $1,410,000; and July (budgeted), $1,520,000. Payments on merchandise purchases: 70% in the month of purchase and 30% in the month following purchase. Purchases amounts are: June (actual), $520,000; and July (budgeted), $550,000. c. d. Budgeted cash disbursements for salaries in July: $320,000. e. Budgeted depreciation expense for July: $11,000. f. Other cash expenses budgeted for July: $210,000. g. Accrued income taxes due in July: $70,000. h. Bank loan interest due in July: $5,500. SANCHEZ COMPANY Cash Budget For The Month Ended July 31 $ Total cash available Cash disbursements $ Total cash disbursements $ check my workeBook LinkView Hint #1references 10. value: 2.00 points Exercise 7-12 Budgeted cash receipts L.O. P1 Emily Company has sales on account and for cash. Specifically, 58% of its sales are on account and 42% are for cash. Credit sales are collected in full in the month following the sale. The company forecasts sales of $530,000 for April, $540,000 for May, and $565,000 for June. The beginning balance of Accounts Receivable is $307,600 on April 1. Prepare a schedule of budgeted cash receipts for April, May, and June. (Input all amounts as positive values. Omit the "$" sign in your response.) EMILY, INC. Cash Receipts Budget For April, May, and June April May $ Cash receipts from June $ $ Total cash receipts $ $ $ 11. value: 2.00 points Exercise 7-11 Budgeted cash disbursements L.O. P1 Jake Company reports the following: July August 29,000 Sales $ Purch ases 17,400 September 37,000 41,000 $ $ 22,200 29,000 Payments for purchases are made in the month after purchase. Selling expenses are 19% of sales, administrative expenses are 12% of sales, and both are paid in the month of sale. Rent expense of $1,500 is paid monthly. Depreciation expense is $1,700 per month. Prepare a schedule of budgeted cash disbursements for August and September. (Input all amounts as positive value. Omit the "$" sign in your response.) JAKE COMPANY Budgeted Cash Disbursements For August and September August September $ $ Total cash disbursements $ check my workeBook LinkView Hint #1references $