a. Debits Credits
- Cash 48,000
- accounts rec. 224,000
- inventory 60,000
- buildings and equ. 370,000
- accounts payable 93,000
- capital stock 500,000
- retained earnings 109,000
- totals 702,000 702,000
b. Actual sales for december and budgeted sales for the next 4 months are as follows
- december(actual) 280,000
- january 400,000
- feb 600,000
- march 300,000
- april 200,000
c. Sales are 20% for cash and 80% on credit. all payments on credit sales are collected in the moneh following the sale. the accounts recievable at dec 31 are a result of December credit sales.
d. The company;s gross margain is 40% of sales. in other words cost of goods sold id 60% of sales.
e.Monthly expenses are budgeted as follows: salaries and wages, 27,000 per month: advertising 70,000 per month: shipping, 5% of sales: other expenses, 3% of sales. depreciation, including depreciation on new assets accquired during the quater will be 42,000 for the quater
f. Each months ending inventory should equal 25% of te following months cost of goods sold.
g. One half of a months inventory purchase is paid for in the month of purchase; the other half is paid in the following month.
h.During feb, the company will purchase a new copy machine for 1,700 cash. during march other equipment will be purchased for cash at a cost of 84,000/
i. During january, the company will declare and pay 45,000 in cash dividends
j. Management wants to maintain a minimum cash balance of 30,000. the company has an agreement with a local bank that allows the company to borrow in increments of 1,000 at the beginning of each moth. te interest rate on these loans is 1% per month and for simplicity we will assume that interest in not compounded. The company would, as far as it it able, repay the loan plus accumlated interest at the end of the quater.
Required: using the data above complete the following statements ans schedules for the first quarter
1. schedule of expected cash collections
Jan Feb March quarter
- cash sales 80,000 ? ? ?
- credit sales 224,000 ? ? ?
- total cash collections 304,000 ? ? 1,284,000
2.A merchandise purchases budget
Jan Feb March quarter
- budgeted cost of goods 240,000* 360,000 ? ?
- add desired ending inve 90,000** ? ? ?
- total needs 330,000 ? 210,000 ?
- less beginning inventory 60,000 ? ? ?
- required purchases 270,000 ? ? 750,000
- * 400,000 sales x 60% cost ratio = 240,000
- ** 360,000x 25%= 90,000
b. Schdule of expected cash disburstments for mercandise purchases
- jan feb march quarter
- december purchases 93,000 ? ? 93,000
- january purchases 135,000 135,000 ? 270,000
- feb purchases ? ? ? ?
- march purchases ? ? ? ?
- total cash disburstment 228,000 292,500 ? ?
- for purchases
3. Schedule of expected cash disburstments for selling ans adminstrive expenses
- jan feb march quarter
- salaries and wages 27,000 ? ? ?
- advertising 70,000 ? ? ?
- shipping 20,000 ? ? ?
- other expenses 12,000 ? ? ?
- total cash disb. 129,000 ? ? 395,000
- selling and admin. exp.
4.Cash budget
- jan feb march quarter
- cash balance, beginning 48,000 48,000
- add cash collections 304,000
- total cash available 352,000
- less cash disbursments
- purchase of inventory 282,000
- selling and adminst. expen 129,000
- purchase of euipment ?
- cash divendends 45,000
- total cash disbursments 402,000
- excess(deficeincy) of cash (50,000) 42,900 45, 300
5.Prepare an absorption costing income statement of the quarter ending march 31 as shown.
6.Prepare a balance sheet as of march 31