Task 6.1: Master budget and performance evaluation (Value 40 points)

Specific instructions: Study the required resources of the module and particularly the illustrative exercise I6.1 to carry out this exercise. Carefully read the financial and operational data of JKL Corporation given below and use it to prepare the budget for: Collections for sales of the quarter (10 points) Purchases for the quarter (10 points) Disbursements in purchases for the quarter (10 points) Selling and administrative expense disbursements for the quarter (10 points)

Financial and operational data of JKL Corporation JKL Corporation is engaged in trading business and is designing its master budget for the next operating quarter from April to June 20xx. The data collected and necessary to work with such a budget are the following: A. Certain data of the Statement of position (Balance Sheet) as of March 31, 20xx:

Dr Cr Cash $20,000 Accounts receivable $64,000 Inventory $15,400 Buildings and equipment (net of depreciation) $225,000 Accounts payable $23,400 Long-term debts $90,000 Common shares- principal $150,000 Retained Earnings $61,000 Totals $324,400 $324,400

B. The projected and actual sales for various months of 20xx are: March (reals) $80,000 April $81,000 May $70,000 June $84,500 July $63,600

merchandise are paid in the month of purchase and the remainder in the month following the purchase. 5- The expected monthly expenses are: salaries, $10,000; advertising, $6,000 per month and remaining expenses (except depreciation) represent 8% of sales. Assume that these expenses are paid every month (nothing is due at the end of the month). 6- Depreciation expense is $10,000 for the quarter and includes the portion that corresponds to assets acquired during the period. 7- Equipment was purchased in cash: $24,000 in April and $14,000 in May 20xx. 8- Management wishes to maintain a minimum cash balance at the end of each month of $8,000. 9- When the company is in need of money, it can borrow from a local bank in increments of $1,000 at the beginning of each month up to a loan limit of $20,000. The interest rate that the bank charges on these loans is 1% per month and the interest is paid the next month (we assume that it is not compound interest and that each loan is made at the end of the month). The company paid dividends of $4,700 in June.

C. Other important data: 1- Monthly sales are 20% in cash and 80% on credit. Credit sales from the previous month are collected in full in the following month (so what is in accounts receivable at the end of March is 80% of March sales). 2- The gross profit margin generated by the corporation on its sales is 30%. 3- Each month's ending inventory is equal to 25% of the next month's budgeted cost of sales. 4- 40% of monthly purchases of merchandise are paid in the month of purchase and the rest in the month following the purchase. 5- The expected monthly expenses are: salaries, $10,000; advertising, $6,000 per month and remaining expenses (except depreciation) represent 8% of sales. Assume that these expenses are paid every month (nothing is due at the end of the month). 6- Depreciation expense is $10,000 for the quarter and includes the portion that corresponds to assets acquired during the period. 7- Equipment was purchased in cash: $24,000 in April and $14,000 in May 20xx. 8- Management wishes to maintain a minimum cash balance at the end of each month of $8,000. 9- When the company is in need of money, it can borrow from a local bank in increments of $1,000 at the beginning of each month up to a loan limit of $20,000. The interest rate that the bank charges on these loans is 1% per month and the interest is paid the next month (we assume that it is not compound interest and that each loan is made at the end of the month). The company paid dividends of $4,700 in June.