You are the accountant tasked with creating the master budget for SRS Educational Supply Company. You have made your budget assumptions and are ready to prepare the following:

Sales Budget - Prepare the sales budget by month and in total. Prepare a schedule of excepted cash collections from sales by month and in total.

Purchasing Budget - Prepare a merchandise purchases budget by month and in total. Prepare a schedule of expected cash disbursements for merchandise purchases by month and in total.

Admin Budget - Prepare a selling and admin budget by month and in total. Add expected cash disbursements for selling and admin by month and in total.

Cash Budget - Prepare a cash budget by month and in total.

Sales Manager Private Information Most likely sales: July $600,000; August $910,000; Sept. $475,000; and Oct. $385,000.

Purchasing Manager Private Information Most likely cost of merchandise as a % of sales 45%. Desired ending inventory as a percentage of next month's cost of sales 20%.

Operation Manager Private Information Most likely shipping expenses as a percent of sales 5.0%. Most likely other expenses as a percent of sales 8.0%. Salaries and wages (per month) $85,000 Most likely advertising costs (per month) $50,000 Most likely insurance costs (per month) $3,000. Depreciation expense (per month) $25,000.

Finance Manager Private Information Percent sales collected in month of sale 30%. Percent sales collected in month after sale 70%. Percent of inventory purchases paid in month of purchase 50%. Percent of inventory purchases paid in month after purchase 50%. Percent of operating expenses paid in month of purchase 100%. Percent of operating expenses paid in month after purchase 0%. Desired minimum ending cash balance each month $35,000. Borrow in increments of $1,000. Monthly interest rate on borrowings (not compounded) 1%.

Other planned outlays of cash Capital expenditures: July $200,000; August $90,000; Sept. 0. Dividends: July $50,000; August 0.

SRS Educational Supply Company Balance Sheet Previous Year End

Assets Current Assets: Cash $40,000 Accounts Receivable $340,000 Inventory $50,000 Prepaid insurance $18,000 Total current assets: $448,000 Building and equipment (net) $860,000 Total assets $1,308,000

Liabilities and Equity Liabilities Accounts payable $130,000 Notes payable 0 Total liabilities $130,000 Stockholders Equity Capital stock $420,000 Retained earnings $758,000 Total equity $1,178,000 Total liabilities and equity $1,308,000