Accounting 2120 Fall 2017 Master Budget Project In-class Quiz - December 5, 2017

Question

Accounting 2120 Fall 2017 Master Budget Project In-class Quiz - December 5, 2017 The following information is available for Super Shirts, Inc., a T-shirt retail store: 1. Balance sheet information as of January 31, 2017: Current Assets Cash Accounts Receivable Inventory $ 127,100 19,800 70,000 31,041 Equipment (net) Current Liabilities Accounts Payable Interest Payable Notes Payable Common stock Paid-in Capital in Excess of Par Retained earnings 3,600 35 10,500 100,000 133,806 2. Recent and anticipated sales: December January February March April $100,000 $60,000 $75,000 $90,000 $80,000 3. Credit sales: Sales are 75% for credit and 25% cash. Assume that the credit accounts are collected 70% within the month ofsale, 20% within the month following the sale, and 9% within the second month following the sale. The other 1% is uncollectible and written off immediately as a bad debt. 4. Cost of goods sold is 60% of sales we pay for 90% of the purchases in the month of purchase and the remaining 10% of the purchases in the month following the purchase 5. Inventory is equal to $70,000 at all times. 6. Operating costs: Salaries and wages average 7% of monthly revenues, other monthly operating costs are $5,000. Assume that these costs are paid out each month. Depreciation is $565 per month. 7. The note payable is due on June 30, 2018, Accrue monthly interest at 4% per annum. 8. Assume that a minimum cash balance of $50,000 must be maintained. Assume also that all borrowing is effective at the beginning of the month and all repayments are made

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Budgeted cash receipts from customers February March April Total Collections from: Cash sales 18750 22500 20000 61250 Credit sales     December sales 6750 6750     January sales 9000 4050 13050     February sales 39375 11250 5063 55688     March sales 47250 13500 60750     April sales 42000 42000 Total credit sales 55125 62550 60563 178238 Total collections 73875 85050 80563 239488 Bad debts 563 675 600 1838 Accounts receivable 23475

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