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The BCJ Company needs a master budget for the three months beginning April 1, 2021. The company retails widgets. The 2019 budget should be based
The BCJ Company needs a master budget for the three months beginning April 1, 2021. The company retails widgets. The 2019 budget should be based on the following information. An ending minimum cash balance of $10,000 each month is required. Sales are forecasted at an average selling price of $8 per widget. Merchandise costs are $4 per widget. Currently, the company maintains an ending inventory balance equal to 20% of the next month's projected cost of goods sold. Purchases during any given month are paid half in the month of purchase and half during the following month. Sales are 20% cash and 80% on credit (payable within 30 days), but experience has shown that 60% of monthly credit sales is collected in the current month, 40% in the next month. Monthly operating expenses are as follows: Wages and salaries Insurance expired Depreciation Utilities Advertising Miscellaneous Rent $15,000 100 1,200 1,000 250 600 400 per month+ 10% of monthly sales. All operating expenses are paid as incurred, except insurance, depreciation, and rent. Rent of $400 is paid at the beginning of each month, and the additional 10% of sales is paid in the month following the sales. The company plans to buy some new equipment for $5,000 cash in May. Cash dividends of $1,500 are to be paid quarterly, beginning April 15. Dividends are declared on the 15th of the last month in the calendar quarter. BCJ has an established line of credit with its bank, Third Fifth National. Money can be borrowed and repaid in multiples of $1.000, at an interest rate of 6% per annum. Management wants to minimize borrowing and repay rapidly. Interest is computed and paid when the principal is repaid. Assume that borrowing occurs at the beginning and repayments at the end of the months in question. Money never borrowed at the beginning and repaid at the end of the same month. Compute interest to the nearest dollar. Balance Sheet March 31, 2021 Assets Cash Accounts receivable (net) Inventory Prepaid insurance Land, Building, Equipment (net) $16,000 19,200 4,000 2,100 75,000 Liabilities Accounts payable (inventory) Dividends payable Rent payable $13,750 1,500 6,000 21,250 Stockholders' Equity Capital stock ($1 par value) Retained earnings Total Liabilities & Stockholders' Equity 54,400 40,650 $116,300 Total assets $116,300 Recent and forecasted sales: January $45,000 February $50,000 May $70,000 June $60,000 April $40,000 March July $60,000 $70,000 Required: 1. Prepare a master budget, using Excel, and all supporting schedules (including sales) for the months April, 2021 through June, 2021. 2. Prepare the budgeted Income Statement for the quarter ended June 30, 2021 and the budgeted Balance Sheet at June 30, 2021
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