Question 4(24 Marks) Budgeting To be done on Excel Email your answer to tutor Hudson Holdings Ltd is a merchandising company that is preparing a master budget for the third quarter of the calendar year The companys balance sheet at June 30 th is shown below Hudson Holdings Ltd Balance Sheet June 30 ASSETS Cash $108,000 Accounts Receivable $163,200 Inventory $ 74,400 Plant Equipment Net of Depreciation $252,000 Total Assets $597,600 LIABILITIES STOCKHOLDERS EQUITY Accounts Payable $ 85,320 Shareholders Equity $392,400 Retained Earnings $119,880 Total Liabilities Stockholders Equity $597,600 Hudson Holdings Ltd managers have made the following additional assumptions and estimates Estimated sales for July, August, September, and October will be $252,000, $276,000, $264,000, and $288,000, respectively All sales are on credit and all credit sales debts are collected Each months credit sales are collected 35 in the month of sale and 65 in the month following the sale All of the accounts receivable at June 30 will be collected in July Each months ending inventory must equal 30 of the cost of the next months sales The cost of goods sold is 60 of sales The company pays for 40 of its merchandise purchases in the month of the purchase and the remaining 60 in the month following the purchase All of the accounts payable at June 30 will be paid in July Monthly selling and administrative expenses are always $72,000 Each month $6,000 of this total amount is depreciation expense and the remaining $66,000 relates to expenses that are paid in the month they are incurred The company does not plan to borrow money or pay or declare dividends during the quarter ended September 30 The company does not plan to issue any shares or repurchase its own shares during the quarter ended September 30 REQUIRED Prepare a schedule of expected cash collections for July, August, and September Also calculate total cash collections for the quarter ended September 30 (6 Marks) (b) i Prepare a merchandise purchases budget for July, August and September and also calculate total merchandise purchases for the quarter ended September 30 (6 Marks) ii Prepare a schedule of expected cash disbursements for merchandise purchases for July, August, and September Also calculate total cash disbursements for merchandise purchases for the quarter ended September 30 (5 Marks) (c) Prepare an income statement for the quarter ended September 30 (Use the absorption format) (3 Marks) (d) Prepare a balance sheet as at September 30 (4 Marks) Question 4 (24 Marks) To be done on Excel REFER TO THE DATA IN QUESTION 4 ABOVE Hudson Holdings Ltd is considering making the following changes to the assumptions underlying its master budget Each months credit sales are collected 45 in the month of sale and 55 in the month following the sale Each months ending inventory must equal 20 of the cost of next months sales The company pays for 30 of its merchandise purchases in the month of the purchase and the remaining 70 in the month following the purchase All other information from question 4 above that is not mentioned remains the same REQUIRED Using the new assumptions described above, complete the following requirements a Prepare a schedule of expected cash flows for July, August, and September Also calculate total cash collections for the quarter ended September 30 (4 Marks) b Prepare a merchandise purchases budget for July, August, and September Also calculate total merchandise purchases for the quarter ended September 30 (5 Marks) Prepare a schedule of expected cash disbursements for merchandise purchases for July, August and September Also calculate total cash disbursements for the quarter ended September 30 (7 Marks) c Prepare an income statement for the quarter ended September 30 (Use the absorption format) (3 Marks) d Prepare a balance sheet as at September 30 (5 Marks)

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Question 4(24 Marks) Budgeting To be done on Excel. Email your answer to tutor. Hudson Holdings Ltd is a merchandising company that is preparing a

Question 4(24 Marks) Budgeting To be done on Excel. Email your answer to tutor.

Hudson Holdings Ltd is a merchandising company that is preparing a master budget for the third quarter of the calendar year. The companys balance sheet at June 30^th is shown below:

Hudson Holdings Ltd
Balance Sheet
June 30
ASSETS
Cash	$108,000
Accounts Receivable	$163,200
Inventory	$ 74,400
Plant & Equipment Net of Depreciation	$252,000
Total Assets	$597,600

LIABILITIES & STOCKHOLDERS EQUITY
Accounts Payable	$ 85,320
Shareholders Equity	$392,400
Retained Earnings	$119,880
Total Liabilities & Stockholders Equity	$597,600

Hudson Holdings Ltd managers have made the following additional assumptions and estimates:

Estimated sales for July, August, September, and October will be $252,000, $276,000, $264,000, and $288,000, respectively.

All sales are on credit and all credit sales debts are collected. Each months credit sales are collected 35% in the month of sale and 65% in the month following the sale. All of the accounts receivable at June 30 will be collected in July.

Each months ending inventory must equal 30% of the cost of the next months sales. The cost of goods sold is 60% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts payable at June 30 will be paid in July.

Monthly selling and administrative expenses are always $72,000. Each month $6,000 of this total amount is depreciation expense and the remaining $66,000 relates to expenses that are paid in the month they are incurred.

The company does not plan to borrow money or pay or declare dividends during the quarter ended September 30. The company does not plan to issue any shares or repurchase its own shares during the quarter ended September 30.

REQUIRED

Prepare a schedule of expected cash collections for July, August, and September. Also calculate total cash collections for the quarter ended September 30. (6 Marks)

(b)

i Prepare a merchandise purchases budget for July, August and September and also calculate total merchandise purchases for the quarter ended September 30. (6 Marks)

ii Prepare a schedule of expected cash disbursements for merchandise purchases for July, August, and September. Also calculate total cash disbursements for merchandise purchases for the quarter ended September 30. (5 Marks)

(d) Prepare a balance sheet as at September 30. (4 Marks)

Question 4 (24 Marks) To be done on Excel.

REFER TO THE DATA IN QUESTION 4 ABOVE..

Hudson Holdings Ltd is considering making the following changes to the assumptions underlying its master budget.

Each months credit sales are collected 45% in the month of sale and 55% in the month following the sale.

Each months ending inventory must equal 20% of the cost of next months sales.

The company pays for 30% of its merchandise purchases in the month of the purchase and the remaining 70% in the month following the purchase.

All other information from question 4 above that is not mentioned remains the same.

REQUIRED:

Using the new assumptions described above, complete the following requirements:

Prepare a schedule of expected cash flows for July, August, and September. Also calculate total cash collections for the quarter ended September 30. (4 Marks)

Prepare a merchandise purchases budget for July, August, and September. Also calculate total merchandise purchases for the quarter ended September 30. (5 Marks)

Prepare a schedule of expected cash disbursements for merchandise purchases for July, August and September. Also calculate total cash disbursements for the quarter ended September 30. (7 Marks)

Prepare an income statement for the quarter ended September 30. (Use the absorption format) (3 Marks)

Prepare a balance sheet as at September 30. (5 Marks)