Problem 9-20 Completing a Master Budget (LO2) The following data relate to the second quarter operations of Leisure Sports, a wholesale distributor of consumer sporting goods, as of March 31 Cash Accounts receivable Inventory Building and equipment, net Accounts payable Common shares Retained earnings $ 9,000 48,000 12,600 214,100 18,300 190,000 75,400 s a. Actual sales for March and budgeted sales for April through July are as follows: Mareh (actual) April May June July $60,000 70,000 05,000 90.000 50,000 Prey 1 of 2 Next > b. Sales are 20% cash and 80% credit. Credit sales are collected in the month following sale. The accounts receivable at March 31 are a result of March credit sales. The company's gross margin is 40% of sales d. Monthly expenses are as follows: salaries and wages $7.500 per month; shipping, 6% of sales; advertising. $6,000 per month; other expenses, 4% of sales. Depreciation, including depreciation on new assets acquired during the quarter, will be $6,000 in total for the quarter. e. Each month's ending inventory should equal 30% of the following month's cost of goods sold. f. One-half of a month's inventory purchases is paid for in the month of purchase; the other half is paid for in the following month, g. Equipment costing $11,500 will be purchased for cash in April and $3,000 will be purchased for cash in May. h. Dividends of $3,500 will be declared and paid in June. 1. The company must maintain a minimum cash balance of $8,000. An open line of credit is available at a local bank. All borrowing is done at the beginning of a month, and all repayments are made at the end of a month. The monthly interest rate is 1%. Interest must be paid at the end of each month based on the total loans outstanding for that month. Required: Using the data above, complete the following: 1-a. Sales budget: Sales wat JUVEU 1-a. Sales budget: Total sales Sales Budget March April May June July $ 60,000 $ 70,000 $ 85,000 $ 90,000 $ 50,000 12,000 14,000 25,500 27,000 15,000 $ 48,000 $ 56,000 $ 59,500 $ 63,000 $ 35,000 Cash Credit $ 1-b. Schedule of expected cash collections: Cash sales Schedule of Expected Cash Collections April May June Quarter $ 14,000 $ 49,000 $ 59,500 $ 156,500 48,000 25,500 27,000 73,500 $ 62,000 $ 74,500 $ 86,500 $ 230,000 Credit sales Total collections 2-a. Merchandise purchases budget: April May June Quarter Budgeted cost of goods sold" $ 42,000 $ 51,000 $ 54,000 $ 147,000 Add desired ending inventoryt 15,300 16,200 9,000 24,300 Total needs $ 57,300 $ 67,200 $ 63,000 $ 171,300 Less beginning inventory 12,600 15,300 16,200 28,800 Required purchases $ 44,700 $ 51,900 $ 46,800 $ 142,500 *For April sales: $70,000 sales x 60% cost ratio At April 30: $51,000 * 30% At June 30: July sales $50,000 * 60% cost ratio * 30% 2-b. Schedule of expected cash disbursements-Merchandise purchases: May June Quarter April $ 18,300 22,350 22,350 March purchases April purchases May purchases June purchases Total disbursements + $ 40,650 $ 22,350 $ 0 $ 0 3. Schedule of expected cash disbursements-Selling and administrative expenses: May June Quarter Salaries and wages April $ 7,500 4,200 6,000 Shipping Advertising Other Total disbursements 2,800 Lt $ 20,500 $ 0 $ 0 $ 0 Saved Help Save & Exit Sul 4. Cash budget: (Round your intermediate calculations and final answers to the nearest whole dollar. Also, round up your interest calculations to the next whole dollar amount. Cash deficiency, repayments and interest should be indicated by a minus sign.) May June $ April 9,000 62,000 71,000 Quarter $ 9,000 62,000 71,000 0 0 40,650 20,500 11,500 40,650 20,500 11,500 Cash Budget Cash balance, beginning Add cash collections Total cash available Less cash disbursements: For inventory purchases For soling and administrative expenses For equipment purchases For dividend payments Total cash disbursements Excess (deficiency) of cash Financing Borrowings Repayments Interest Total financing Cash balance, ending 0 0 72,650 0 72,650 (1.650) 0 0 (1.650) + 0 0 0 0 0 (1.650) $ 0 0 $ 0 (1.650) $ 0 $ 5. Prepare an absorption costing income statement for the quarter ended June 30. LEISURE SPORTS Income Statement For the Quarter Ended June 30 Cost of goods sold: k nces 0 0 Less Operating expenses: 0 0 $ 0 Prey 1 of 2 ... Next >