Developing a Master Budget for a Merchandising Organization Peyton Department St
ID: 2474690 • Letter: D
Question
Developing a Master Budget
for a Merchandising Organization
Peyton Department Store prepares budgets quarterly. The following information is available for use in planning the second quarter budgets for 2010.
Actual and forecasted sales for selected months in 2010 are as follows:
Monthly operating expenses are as follows:
Cash dividends of $17,000 are declared during the third month of each quarter and are paid during the first month of the following quarter. Operating expenses, except insurance, rent, and depreciation are paid as incurred. Rent is paid during the following month. The prepaid insurance is for five more months. Cost of goods sold is equal to 50 percent of sales. Ending inventories are sufficient for 120 percent of the next month's sales. Purchases during any given month are paid in full during the following month. All sales are on account, with 50 percent collected during the month of sale, 40 percent during the next month, and 10 percent during the month thereafter. Money can be borrowed and repaid in multiples of $1,000 at an interest rate of 12 percent per year. The company desires a minimum cash balance of $2,000 on the first of each month. At the time the principal is repaid, interest is paid on the portion of principal that is repaid. All borrowing is at the beginning of the month, and all repayment is at the end of the month. Money is never repaid at the end of the month it is borrowed.
(a) Prepare a purchases budget for each month of the second quarter ending June 30, 2010.
(b) Prepare a cash receipts schedule for each month of the second quarter ending June 30, 2010. Do not include borrowings.
Only use negative signs, if needed, for: excess receipts over disbursements, balance before borrowings and cash balances (beginning and ending).
(c) Prepare a cash disbursements schedule for each month of the second quarter ending June 30, 2010. Do not include repayments of borrowings.
(d) Prepare a cash budget for each month of the second quarter ending June 30, 2010. Include budgeted borrowings and repayments.
(e) Prepare an income statement for each month of the second quarter ending June 30, 2010.
Only use negative signs to show net losses in income.
(f) Prepare a budgeted balance sheet as of June 30, 2010.
PEYTON DEPARTMENT STOREBalance Sheet
March 31, 2010 Assets Liabilities and Stockholders' Equity Cash $2,000 Accounts payable $26,000 Accounts receivable 25,000 Dividends payable 17,000 Inventory 30,000 Rent payable 1,000 Prepaid Insurance 2,000 Stockholders' equity 40,000 Fixtures 25,000 Total assets $84,000 Total liabilities and equity $84,000
Explanation / Answer
a.
b. Cash receipts:
Pls ask the rest of the parts separately
Particulars April May June Sales 50000 60000 70000 COGS (50% of sales) 25000 30000 35000 Closing Inventory (120% of next month's sales) 60000*120% =72000 70000*120% =84000 90000*120% =108000 Opening stock 30000 (given) 72000 84000 Purchases (COGS+Closing inventory - opening inventory) 67000 42000 59000Related Questions
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