Exercise 7-9 Budgeted Balance Sheet [LO7-10] The management of Mecca Copy, a pho

Question

Exercise 7-9 Budgeted Balance Sheet [LO7-10]

The management of Mecca Copy, a photocopying center located on University Avenue, has compiled the following data to use in preparing its budgeted balance sheet for next year:

The beginning balance of retained earnings was $31,000, net income is budgeted to be $21,400, and dividends are budgeted to be $3,900.

Prepare the company’s budgeted balance sheet. (Amounts to be deducted should be indicated by a minus sign.)

Problem 7-19A Schedules of Expected Cash Collections and Disbursements [LO7-2, LO7-4, LO7-8]

Sales on account are collected over a three-month period as follows: 20% collected in the month of sale, 60% collected in the month following sale, and 18% collected in the second month following sale. The remaining 2% is uncollectible.

Purchases of inventory will total $372,000 for December. Thirty percent of a month’s inventory purchases are paid during the month of purchase. The accounts payable remaining from November’s inventory purchases total $189,500, all of which will be paid in December.

Prepare a schedule of expected cash disbursements for merchandise purchases for December.

Prepare a cash budget for December. Indicate in the financing section any borrowing that will be needed during the month. Assume that any interest will not be paid until the following month.

The management of Mecca Copy, a photocopying center located on University Avenue, has compiled the following data to use in preparing its budgeted balance sheet for next year:

Explanation / Answer

Mecca Copy Budgeted Balance Sheet Assets Current assets: Cash 19400 Accounts receivable 9500 Supplies inventory 3400 Total current assets 32300 Plant and equipment: 41000 Less: Accumulated depreciation 16600 Plant and equipment, net 24400 Total assets 56700 Liabilities and Stockholders' Equity Current liabilities: Accounts payable 3200 Total current liabilities 3200 Stockholders' equity: Common stock 5000 Retained earnings = 31000+21400-3900 = 48500 Total stockholders' equity 53500 Total liabilities and stockholders' equity 56700 Note: Cash balance = Total liabilities and equity-Plant and equipment net-Supplies inventory-Accounts receivable = 56700-24400-9500-3400 = 19400 Ashton Company Schedule of Expected Cash Collections December cash sales 85600 Collections on account: October sales 90000 November sales 374400 December sales 134800 Total cash collections 684800 Ashton Company Schedule of Expected Cash Disbursements Payments to suppliers: November purchases 189500 December purchases 111600 Total cash payments 301100 Ashton Company Cash Budget For the Month of December Beginning cash balance 47000 Add collections from customers 684800 Total cash available 731800 Less: Cash disbursements: Payments to suppliers for inventory 301100 Selling and administrative expenses 433000 New web server 88500 Dividends paid 14500 Total cash disbursements 837100 Excess (deficiency) of cash available over disbursements -105300 Financing: Borrowings 125300 Repayments 0 Interest 0 Total financing 125300 Ending cash balance 20000

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