October saies are es wed to be $200000. ufwhich 40 percent wil be cain \"nd 60 u

Question

October saies are es wed to be $200000. ufwhich 40 percent wil be cain "nd 60 une ud, mu sales to increase t the ne of 25 percent per moth Prepares buer Prepare schedule of cash recepts the nest month's cost of goods soid However ending inventory of December is eeced so be 52 000 u Pan 1 or2 --. b. The coroany espect) to colect00 percent or the secounts receivatie c. The cost of goods sold is 60 percent of sales. The company desires to maintain s minimum ending cent of d. The eompany peys 70percent o, accounts payable in the-h ofpurchase and the "enur X) enr-ne " e. Budgebed selling and administrative expenses per gewrted by eredt"merom ui-ngo" sa" 20 are made on account Prepare an inventory purchases budget Prepare a cash payments budget for inventory purchases Salary expense (fixed) Sales commissions Supplies expense Utilities (fixed) Depreciation on store fixtures (fixed)* Rent (Fixed) Miscellaneous (fixed) $18,8ee 5% of Sales 2% of Sales S 1,400 s 4,899 § 4,see 5 1,2e0 The capital expenditures budget indicates that Adems will spend $164,000 on October or st ture wch hava $20.000 salvage value and a three-year p6mom) uset life. Use this information to prepare a selling and administrative expenses budger t Utities and saies commissions are paid the month after they are incured ail other expenses ae aid e ans ne

Explanation / Answer

Answer: Requirement 1 Sales Budget October November December Quarter Sales $ $        200,000.00 $        250,000.00 $        312,500.00 $        762,500.00 (200,000*125%) (250,000*125%) Requirement 2 Schedule of expected cash collection October November December Quarter Cash collection (40% of sales) $          80,000.00 $        100,000.00 $        125,000.00 $        305,000.00 Credit sales (60% of Sales) $        120,000.00 $        150,000.00 $        187,500.00 $        457,500.00 From accounts receivable From October sales $              120,000 $              120,000 From November Sales $              150,000 $              150,000 From December Sales $                         -   $                         -   Total cash collections $              229,500 $              297,000 $              306,500 $              833,000 Current month collection = 60% of previous month sale Requirement c Merchndise purchase budget October November December Quarter January Budgeted cost of goods sold (60% of Sales) $        120,000.00 $        150,000.00 $        187,500.00 $        457,500.00 $        390,625.00 Add Desired ending inventory (10% of next month Cost of goods sold) $          15,000.00 $          18,750.00 $          39,062.50 $          39,062.50 (312500*125%) Total needs $        135,000.00 $        168,750.00 $        226,562.50 $        496,562.50 Less: Beginning inventory $          12,000.00 $          15,000.00 $          18,750.00 $          12,000.00 Required purchases $        123,000.00 $        153,750.00 $        207,812.50 $        484,562.50 Ending Inventory $390,625*60%*10% $          39,062.50 Requirement d Schedule of expected cash disbursements-Merchandise purchases October November December Quarter For October purchases $          86,100.00 $          36,900.00 $        123,000.00 For November purchases $        107,625.00 $          46,125.00 $        153,750.00 For December purchases $        145,468.75 $        145,468.75 Total cash disbursement $          86,100.00 $        144,525.00 $        191,593.75 $        422,218.75 Current month payment = 70% of current month purchases+30% of previous month purchases

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