You are the new manager of the local Tronic Electronics store. Top management of Tronic Electronics is convinced that management training should include the active participation of store managers in the budgeting process. You have been asked to prepare a complete master budget for your store for June, July, and August. All accounting is done centrally so you have no expert help on the premises. In addition, tomorrow the branch manager and the assistant controller will be here to examine your work; at that time, they will assist you in formulating the final budget document. The idea is to have you prepare the initial budget on your own so that you gain more confidence about accounting matters. You want to make a favorable impression on your superiors, so you gather the following financial statement and sales data as of May 31, 20X8 (Click the icon to view the data.) (Click the icon to view the additional information.) Read the requirements. Requirement 1. Prepare a budgeted income statement for the coming June through August quarter, a cash budget for each of the next three months, and a budgeted balance sheet for August 31, 20X8. All operations are evaluated on a before-income-tax basis, so income taxes may be ignored here. More Info Before we prepared the budgeted income statements, cash budgets, and budgeted bal schedule of cash disbursements for purchases, and a schedule of operating expenses and disbursements for expenses (except interest.) Beg Data Table X Cash $ 18,800 Recent and Projected Sales Inventory $ 110,000 Accounts receivable 130,000 Net furniture and fixtures 240,000 Credit sales are 90% of total sales. Seventy percent of each credit account is collected in the month following the sale and the remaining 30% is collected in the subsequent month. Assume that bad debts are negligible and can be ignored. The accounts receivable on May 31 are the result of the credit sales for April and May (0.30 x 0.90 x $110,000) + (1.0 x 0.90 x $130,000) = $146,700. The policy is to acquire enough inventory each month to equal the following month's projected cost of goods sold. All purchases are paid for in the month following purchase. The average gross profit on sales is 31%. Salaries, wages, and commissions average 28% of sales; all other variable expenses are 3% of sales. Fixed expenses for rent, property taxes, and miscellaneous payroll and other items are $4,000 monthly. Assume that these variable and fixed expenses require cash disbursements each month. Depreciation is $1,100 monthly In June, $15,000 is going to be disbursed for fixtures acquired and recorded in furniture and fixtures in May. The May 31 balance of accounts payable includes this amount. Assume that a minimum cash balance of $3,000 is to be maintained. Also assume that all borrowings are effective at the beginning of the month and all repayments are made at the end of the month of repayment. Interest is compounded and added to the outstanding balance each month, but interest is paid only at the ends of months when principal is repaid. The interest rate is 9% per annum, round interest computations and interest payments to the nearest dollar. Interest payments may be any dollar amount, but all borrowing and repayments of principal are made in multiples of $1,000. 165,600 April 146,700 May 46,000 June 377,100 July 180,600 August 196,500 September $ Total assets 120,000 Accounts payable $ 150,000 Owners' equity 130,000 Total liabilities $ 377,100 and owners' equities Check Answer Requirement 1. Prepare a budgeted income statement for the coming June through August quarter, a cash budget for each of the next three months, and a budgeted balance sheet for August 31, 20X8. All operations are evaluated on a before-income-ta basis, so income taxes may be ignored here. Before we prepared the budgeted income statements, cash budgets, and budgeted balance sheet, let's prepare a sales budget, a schedule of cash collections from customers, a purchases budget, a schedule of cash disbursements for purchases, and a schedule of operating expenses and disbursements for expenses (except interest.) Begin by preparing the sales budget for the June through August quarter. Schedule a: Sales budget June July 102,000 Credit sales 162,000 August 90,000 60,000 108,000 68,000 Cash sales $ 270,000 $ 170,000 $ 150,000 Total sales Now prepare a schedule of cash collections from customers. Schedule b: Cash collections from customers June July For current month sales $ 68,000 $ August 60,000 81,600 32.400 108,000 $ 57,600 14,400 For sales from 1 month prior 129,600 14,400 For sales from 2 months prior 180,000 $ 212,000 $ 174,000 Total collections from customers Next, prepare a schedule showing the budgeted monthly purchases for May through August. Schedule c: Purchases budget May June July 105,000 $ August 84,000 Desired purchases $ 189,000 $ 119,000 $ Prepare a schedule of cash disbursements for purchases. Schedule d: Cash disbursements for purchases June July 119,000 $ August 105,000 Last month's purchases $ 189,000 $ Now prepare a schedule of operating expenses and disbursements for expenses (except interest). Schedules e and f: Operating expenses and disbursements for expenses (except interest) June July August Cash expenses $ 51,300 $ 32,300 $ 28,500 Salaries, wages, commissions Other variable expenses 18,900 11,900 10,500 Fixed expenses 4,000 4,000 4,000 Total disbursements for expenses 74,200 $ 48,200 $ 43,000 Noncash expenses 1.100 1,100 1,100 Depreciation $ 75,300 $ 49,300 $ 44.100 Total operating expenses Prepare the cash budget for June, July, and August. Recall that all borrowing and repayments of principal are made in multiples of $1,000. (Complete all answer boxes. Use a minus sign or parentheses for cash outflows and cash deficiencies. Round your answer for Borrowing to the nearest thousand dollars.) Tronic Electronics Cash Budget for the months of June - August June July Beginning cash balance $ 17,700 $ 8,500 $ 8,000 August 8,894 8,000 Minimum cash balance required 8,000 9,700 500 894 Available cash balance Cash receipts and disbursements: Collections from customers Payments for merchandise Payments for operating expenses Payments for furniture and fixtures 180,000 (189,000) (74,200) (10,000) 212,000 (119,000) (48,200) 174,000 (105,000) (43,000) 0 (1406) (342) 174,000 Cash receipts and disbursements: Collections from customers Payments for merchandise Payments for operating expenses Payments for furniture and fixtures 180,000 (189,000) (74,200) (10,000) 212,000 (119,000) (48,200) (105,000) (43,000) Payments for interest (1,406) (342) Net cash receipts and disbursements (93,200) 43,394 25,658 (83,500) 43,894 $ 26,552 Excess (deficiency) of cash before financing Financing Borrowing $ 84,000 $ $ (43,000) (26,000) Repayments Total cash from financing 84,000 (43,000) (26,000) $ 8,500 $ 8,894 $ 8,552 Ending cash balance Prepare a budgeted monthly income statement for the coming June through August and for the quarter in total. (Complete all answer boxes. Use a minus sign or parentheses for a loss.) Sales $ $ 270,000 $ 189,000 170,000 $ 119,000 150,000 105,000 590,000 413,000 Cost of goods sold 81,000 51,000 45,000 177,000 Gross profit Operating expenses: Salaries, wages, commissions Rent, taxes and other fixed expenses Other variable operating expenses 51,300 32,300 28,500 4,000 4,000 4,000 112,100 12,000 41,300 3,300 11,900 10,500 18,900 1,100 1.100 Depreciation 1.100 75.300 49,300 44.100 168,700 Total operating expenses Income (loss) from operations 900 5,700 700 1,700 706 8,300 1,748 Interest expense 342 994 Net income (loss) 5,000 $ 558 $ 6,552 Prepare a budgeted balance sheet for August 31, 20X8. Tronic Electronics Budgeted Balance Sheet August 31, 20X8 Assets Liabilities and Owners' Equity Current assets Current liabilities Cash $ 8,552 Accounts payable $ 84,000 15,000 Accounts receivable Note payable 110,400 84,000 Merchandise inventory Total current liabilities 99,000 Total current assets 202,952 Net furniture and fixtures 48,700 Owners' equity 152,652 $ 251,652 $ 251,652 Total assets Total liabilities and owners' equity Requirement 2. Explain why there is a need for a bank loan and what operating sources supply cash for repaying the bank loan. You are the new manager of the local Tronic Electronics store. Top management of Tronic Electronics is convinced that management training should include the active participation of store managers in the budgeting process. You have been asked to prepare a complete master budget for your store for June, July, and August. All accounting is done centrally so you have no expert help on the premises. In addition, tomorrow the branch manager and the assistant controller will be here to examine your work; at that time, they will assist you in formulating the final budget document. The idea is to have you prepare the initial budget on your own so that you gain more confidence about accounting matters. You want to make a favorable impression on your superiors, so you gather the following financial statement and sales data as of May 31, 20X8 (Click the icon to view the data.) (Click the icon to view the additional information.) Read the requirements. Requirement 1. Prepare a budgeted income statement for the coming June through August quarter, a cash budget for each of the next three months, and a budgeted balance sheet for August 31, 20X8. All operations are evaluated on a before-income-tax basis, so income taxes may be ignored here. More Info Before we prepared the budgeted income statements, cash budgets, and budgeted bal schedule of cash disbursements for purchases, and a schedule of operating expenses and disbursements for expenses (except interest.) Beg Data Table X Cash $ 18,800 Recent and Projected Sales Inventory $ 110,000 Accounts receivable 130,000 Net furniture and fixtures 240,000 Credit sales are 90% of total sales. Seventy percent of each credit account is collected in the month following the sale and the remaining 30% is collected in the subsequent month. Assume that bad debts are negligible and can be ignored. The accounts receivable on May 31 are the result of the credit sales for April and May (0.30 x 0.90 x $110,000) + (1.0 x 0.90 x $130,000) = $146,700. The policy is to acquire enough inventory each month to equal the following month's projected cost of goods sold. All purchases are paid for in the month following purchase. The average gross profit on sales is 31%. Salaries, wages, and commissions average 28% of sales; all other variable expenses are 3% of sales. Fixed expenses for rent, property taxes, and miscellaneous payroll and other items are $4,000 monthly. Assume that these variable and fixed expenses require cash disbursements each month. Depreciation is $1,100 monthly In June, $15,000 is going to be disbursed for fixtures acquired and recorded in furniture and fixtures in May. The May 31 balance of accounts payable includes this amount. Assume that a minimum cash balance of $3,000 is to be maintained. Also assume that all borrowings are effective at the beginning of the month and all repayments are made at the end of the month of repayment. Interest is compounded and added to the outstanding balance each month, but interest is paid only at the ends of months when principal is repaid. The interest rate is 9% per annum, round interest computations and interest payments to the nearest dollar. Interest payments may be any dollar amount, but all borrowing and repayments of principal are made in multiples of $1,000. 165,600 April 146,700 May 46,000 June 377,100 July 180,600 August 196,500 September $ Total assets 120,000 Accounts payable $ 150,000 Owners' equity 130,000 Total liabilities $ 377,100 and owners' equities Check Answer Requirement 1. Prepare a budgeted income statement for the coming June through August quarter, a cash budget for each of the next three months, and a budgeted balance sheet for August 31, 20X8. All operations are evaluated on a before-income-ta basis, so income taxes may be ignored here. Before we prepared the budgeted income statements, cash budgets, and budgeted balance sheet, let's prepare a sales budget, a schedule of cash collections from customers, a purchases budget, a schedule of cash disbursements for purchases, and a schedule of operating expenses and disbursements for expenses (except interest.) Begin by preparing the sales budget for the June through August quarter. Schedule a: Sales budget June July 102,000 Credit sales 162,000 August 90,000 60,000 108,000 68,000 Cash sales $ 270,000 $ 170,000 $ 150,000 Total sales Now prepare a schedule of cash collections from customers. Schedule b: Cash collections from customers June July For current month sales $ 68,000 $ August 60,000 81,600 32.400 108,000 $ 57,600 14,400 For sales from 1 month prior 129,600 14,400 For sales from 2 months prior 180,000 $ 212,000 $ 174,000 Total collections from customers Next, prepare a schedule showing the budgeted monthly purchases for May through August. Schedule c: Purchases budget May June July 105,000 $ August 84,000 Desired purchases $ 189,000 $ 119,000 $ Prepare a schedule of cash disbursements for purchases. Schedule d: Cash disbursements for purchases June July 119,000 $ August 105,000 Last month's purchases $ 189,000 $ Now prepare a schedule of operating expenses and disbursements for expenses (except interest). Schedules e and f: Operating expenses and disbursements for expenses (except interest) June July August Cash expenses $ 51,300 $ 32,300 $ 28,500 Salaries, wages, commissions Other variable expenses 18,900 11,900 10,500 Fixed expenses 4,000 4,000 4,000 Total disbursements for expenses 74,200 $ 48,200 $ 43,000 Noncash expenses 1.100 1,100 1,100 Depreciation $ 75,300 $ 49,300 $ 44.100 Total operating expenses Prepare the cash budget for June, July, and August. Recall that all borrowing and repayments of principal are made in multiples of $1,000. (Complete all answer boxes. Use a minus sign or parentheses for cash outflows and cash deficiencies. Round your answer for Borrowing to the nearest thousand dollars.) Tronic Electronics Cash Budget for the months of June - August June July Beginning cash balance $ 17,700 $ 8,500 $ 8,000 August 8,894 8,000 Minimum cash balance required 8,000 9,700 500 894 Available cash balance Cash receipts and disbursements: Collections from customers Payments for merchandise Payments for operating expenses Payments for furniture and fixtures 180,000 (189,000) (74,200) (10,000) 212,000 (119,000) (48,200) 174,000 (105,000) (43,000) 0 (1406) (342) 174,000 Cash receipts and disbursements: Collections from customers Payments for merchandise Payments for operating expenses Payments for furniture and fixtures 180,000 (189,000) (74,200) (10,000) 212,000 (119,000) (48,200) (105,000) (43,000) Payments for interest (1,406) (342) Net cash receipts and disbursements (93,200) 43,394 25,658 (83,500) 43,894 $ 26,552 Excess (deficiency) of cash before financing Financing Borrowing $ 84,000 $ $ (43,000) (26,000) Repayments Total cash from financing 84,000 (43,000) (26,000) $ 8,500 $ 8,894 $ 8,552 Ending cash balance Prepare a budgeted monthly income statement for the coming June through August and for the quarter in total. (Complete all answer boxes. Use a minus sign or parentheses for a loss.) Sales $ $ 270,000 $ 189,000 170,000 $ 119,000 150,000 105,000 590,000 413,000 Cost of goods sold 81,000 51,000 45,000 177,000 Gross profit Operating expenses: Salaries, wages, commissions Rent, taxes and other fixed expenses Other variable operating expenses 51,300 32,300 28,500 4,000 4,000 4,000 112,100 12,000 41,300 3,300 11,900 10,500 18,900 1,100 1.100 Depreciation 1.100 75.300 49,300 44.100 168,700 Total operating expenses Income (loss) from operations 900 5,700 700 1,700 706 8,300 1,748 Interest expense 342 994 Net income (loss) 5,000 $ 558 $ 6,552 Prepare a budgeted balance sheet for August 31, 20X8. Tronic Electronics Budgeted Balance Sheet August 31, 20X8 Assets Liabilities and Owners' Equity Current assets Current liabilities Cash $ 8,552 Accounts payable $ 84,000 15,000 Accounts receivable Note payable 110,400 84,000 Merchandise inventory Total current liabilities 99,000 Total current assets 202,952 Net furniture and fixtures 48,700 Owners' equity 152,652 $ 251,652 $ 251,652 Total assets Total liabilities and owners' equity Requirement 2. Explain why there is a need for a bank loan and what operating sources supply cash for repaying the bank loan