The balance sheet of Snapshot, Inc., a distributor of photographic supplies, as
ID: 2476814 • Letter: T
Question
The balance sheet of Snapshot, Inc., a distributor of photographic supplies, as of May 31 is given below
Sales are budgeted at $420,000 for June. Of these sales, $55,000 will be for cash; the remainder will be credit sales. One-half of a month’s credit sales are collected in the month the sales are made, and the remainder is collected the following month. All of the May 31 accounts receivable will be collected in June.
Purchases of inventory are expected to total $330,000 during June. These purchases will all be on account. Forty percent of all inventory purchases are paid for in the month of purchase; the remainder are paid in the following month. All of the May 31 accounts payable to suppliers will be paid during June.
Selling and administrative expenses for June are budgeted at $75,000 , exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $3,600 for the month.
The note payable on the May 31 balance sheet will be paid during June. The company’s interest expense for June (on all borrowing) will be $500 , which will be paid in cash.
During June, the company will borrow $34,000 from its bank by giving a new note payable to the bank for that amount. The new note will be due in one year.
Prepare schedule of expected cash collections from sales and a schedule of expected cash disbursements for inventory purchases
Schedule of Expected Cash Collections:
Cash Sales- June:
Collections on accounts recievable:
May 31 Balance:
June:
Total Cash Receipts:
Schedule of Expected Cash Disbursements
May 31 accounts payable balance:
June purchases:
Total cash payments:
1b. Prepare a cash budget for June
Cash balance, beginning:
Add reciepts from customers:
Total cash avalible:
Less disbursements
Purchase of inventory
Selling and administrative expenses:
Purchases of equipment:
Total cash disbursements:
Excess of reciepts over disbursements:
Financing
Borrowings- note:
Repayments- note:
Interest:
Total financing:
Cash balance, ending:
Prepare a budgeted income statement for June using the absorption costing income statement format.
The balance sheet of Snapshot, Inc., a distributor of photographic supplies, as of May 31 is given below
Snapshot, Inc.Balance Sheet
May 31 Assets Cash $ 12,000 Accounts receivable 88,000 Inventory 32,000 Buildings and equipment, net of depreciation 660,000 Total assets $ 792,000 Liabilities and Stockholders' Equity Accounts payable $ 91,000 Note payable 31,000 Capital stock 580,000 Retained earnings 90,000 Total liabilities and stockholders' equity $ 792,000 The company is in the process of preparing a budget for June and has assembled the following data:
Sales are budgeted at $420,000 for June. Of these sales, $55,000 will be for cash; the remainder will be credit sales. One-half of a month’s credit sales are collected in the month the sales are made, and the remainder is collected the following month. All of the May 31 accounts receivable will be collected in June.
b.Purchases of inventory are expected to total $330,000 during June. These purchases will all be on account. Forty percent of all inventory purchases are paid for in the month of purchase; the remainder are paid in the following month. All of the May 31 accounts payable to suppliers will be paid during June.
c. The June 30 inventory balance is budgeted at $60,000 . d.Selling and administrative expenses for June are budgeted at $75,000 , exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $3,600 for the month.
e.The note payable on the May 31 balance sheet will be paid during June. The company’s interest expense for June (on all borrowing) will be $500 , which will be paid in cash.
f. New warehouse equipment costing $11,000 will be purchased for cash during June. g.During June, the company will borrow $34,000 from its bank by giving a new note payable to the bank for that amount. The new note will be due in one year.
Required: 1a.Prepare schedule of expected cash collections from sales and a schedule of expected cash disbursements for inventory purchases
Schedule of Expected Cash Collections:
Cash Sales- June:
Collections on accounts recievable:
May 31 Balance:
June:
Total Cash Receipts:
Schedule of Expected Cash Disbursements
May 31 accounts payable balance:
June purchases:
Total cash payments:
1b. Prepare a cash budget for June
Cash balance, beginning:
Add reciepts from customers:
Total cash avalible:
Less disbursements
Purchase of inventory
Selling and administrative expenses:
Purchases of equipment:
Total cash disbursements:
Excess of reciepts over disbursements:
Financing
Borrowings- note:
Repayments- note:
Interest:
Total financing:
Cash balance, ending:
2.Prepare a budgeted income statement for June using the absorption costing income statement format.
3. Prepare a budgeted balance sheet as of June 30.Explanation / Answer
Answer:1
Answer:2
Answer:3
Schedule of expected cash collections Cash Sales- June: 55000 Collections on accounts recievable: May 31 Balance: 88000 June: 182500 Total cash receipts 325500 Schedule of Expected Cash Disbursements May 31 accounts payable balance: 91000 June purchases: 132000 Total cash payments 223000 Cash Budget For June Cash balance, beginning: 12000 Add: Receipts from customers 325500 Total cash avalible: 337500 Less disbursements Purchase of inventory 223000 Selling and administrative expenses: 75000 Purchases of equipment: 11000 Total cash disbursements: 309000 Excess of reciepts over disbursements: 28500 Financing Borrowings- note: 34000 Repayments- note: -31000 Interest: 500 Total financing: 2500 Cash balance, ending: 31000Related Questions
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