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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.
|
PEYTON DEPARTMENT STORE Balance Sheet |
March |
|||||||||||||
|
Assets |
Liabilities and Stockholders’ Equity |
Cash |
$ |
2,000 |
Accounts payable |
$26,000 |
||||||||
|
Accounts receivable |
25,000 |
Dividends payable |
17,000 |
|||||||||||
|
Inventory |
30,000 |
Rent |
1,000 |
|||||||||||
| Prepaid |
Insurance |
Stockholders’ equity |
40,000 |
|||||||||||
|
Fixtures |
Total |
$84,000 |
Total liabilities and equity |
Actual and forecasted sales for selected months in 2010 are as follows:
|
Month |
Sales |
||||
|
January |
$ |
70,000 |
|||
|
February |
50,000 |
||||
|
|
April |
|
May |
60,000 |
|
June |
|
July |
90,000 |
||||
|
August |
80,000 |
Monthly operating expenses are as follows:
|
Wages and salaries |
|||||
|
Depreciation |
100 |
||||
|
Utilities |
|||||
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.
|
Peyton Department Store Monthly Purchase Budget Quarter Ending June 30, 2010 |
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|
Budgeted purchases |
$ |
Answer[removed] |
$Answer[removed] |
(b) Prepare a cash receipts schedule for each month of the second quarter ending June 30, 2010. Do not include borrowings.
|
Peyton Department Store Schedule of Monthly Cash |
Receipts |
||
|
Total cash receipts |
(c) Prepare a cash disbursements schedule for each month of the second quarter ending June 30, 2010. Do not include repayments of borrowings.
|
Peyton Department Store Schedule of Monthly Cash |
Disbursements |
||
|
Total cash disbursements |
(d) Prepare a cash budget for each month of the second quarter ending June 30, 2010. Include budgeted borrowings and repayments.
|
Peyton Department Store Monthly Cash Budget Quarter Ending June 30, 2010 |
|
|
Cash balance, beginning |
|
|
Excess receipts over disb. |
|
|
Balance before borrowings |
|
|
Borrowings |
|
|
Loan repayments |
|
|
Cash balance, ending |
(e) Prepare an income statement for each month of the second quarter ending June 30, 2010.
|
Peyton Department Store Budgeted Monthly Income Statements Quarter Ending June 30, 2010 |
|
|
Cost of sales |
|
|
Gross profit |
|
|
Operating expenses: |
|
|
Interest |
|
|
Total expenses |
|
|
Net income |
(f) Prepare a budgeted balance sheet as of June 30, 2010.
Peyton Department Store Budgeted Balance Sheet June 30, 2010AssetsLiabilities and Equity Cash$Answer[removed] Merchandise payable$Answer[removed] Accounts receivableAnswer[removed] Dividend payableAnswer[removed] InventoryAnswer[removed]
Rent payable
Answer[removed] Prepaid insuranceAnswer[removed] Loans payableAnswer[removed] FixturesAnswer[removed] Interest payableAnswer[removed]
Total assets
$Answer[removed] Stockholders’ equityAnswer[removed] Total liab. & equity$Answer[removed]
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.PEYTON DEPARTMENT STORE Balance Sheet March 31, 2010AssetsLiabilities and Stockholders’ Equity
Accounts receivable25,000Dividends payable17,000Inventory30,000Rent payable1,000
Prepaid Insurance
2,000Stockholders’ equity40,000Fixtures25,000
Actual and forecasted sales for selected months in 2010 are as follows:MonthSales Revenue
January$70,000
February50,000March40,000
July90,000August80,000
Monthly operating expenses are as follows:Wages and salaries$26,000Depreciation100Utilities1,000Rent1,000 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 $2,000 on the first of each month. At the time the principal is repaid, interest is paid on the portion of principal that is repaid. All borrowing is at the beginning of the month, and all repayment is at the end of the month. Money is never repaid at the end of the month it is borrowed. (a) Prepare a purchases budget for each month of the second quarter ending June 30, 2010.Peyton Department Store Monthly Purchase Budget Quarter Ending June 30, 2010 AprilMayJuneTotalBudgeted purchases$Answer[removed] $Answer[removed] $Answer[removed] $Answer[removed] (b) Prepare a cash receipts schedule for each month of the second quarter ending June 30, 2010. Do not include borrowings.Peyton Department Store Schedule of Monthly Cash Receipts Quarter Ending June 30, 2010 AprilMayJuneTotalTotal cash receipts$Answer[removed] $Answer[removed] $Answer[removed] $Answer[removed] (c) Prepare a cash disbursements schedule for each month of the second quarter ending June 30, 2010. Do not include repayments of borrowings.Peyton Department Store Schedule of Monthly Cash Disbursements Quarter Ending June 30, 2010 AprilMayJuneTotalTotal cash disbursements$Answer[removed] $Answer[removed] $Answer[removed] $Answer[removed] (d) Prepare a cash budget for each month of the second quarter ending June 30, 2010. Include budgeted borrowings and repayments.Peyton Department Store Monthly Cash Budget Quarter Ending June 30, 2010 AprilMayJuneTotalCash balance, beginning$Answer[removed] $Answer[removed] $Answer[removed] $Answer[removed] ReceiptsAnswer[removed] Answer[removed] Answer[removed] Answer[removed] DisbursementsAnswer[removed] Answer[removed] Answer[removed] Answer[removed] Excess receipts over disb.Answer[removed] Answer[removed] Answer[removed] Answer[removed] Balance before borrowingsAnswer[removed] Answer[removed] Answer[removed] Answer[removed] BorrowingsAnswer[removed] Answer[removed] Answer[removed] Answer[removed] Loan repaymentsAnswer[removed] Answer[removed] Answer[removed] Answer[removed] Cash balance, ending$Answer[removed] $Answer[removed] $Answer[removed] $Answer[removed] (e) Prepare an income statement for each month of the second quarter ending June 30, 2010.Peyton Department Store Budgeted Monthly Income Statements Quarter Ending June 30, 2010 AprilMayJuneTotalSales$Answer[removed] $Answer[removed] $Answer[removed] $Answer[removed] Cost of salesAnswer[removed] Answer[removed] Answer[removed] Answer[removed] Gross profitAnswer[removed] Answer[removed] Answer[removed] Answer[removed] Operating expenses: Wages and salariesAnswer[removed] Answer[removed] Answer[removed] Answer[removed] DepreciationAnswer[removed] Answer[removed] Answer[removed] Answer[removed] UtilitiesAnswer[removed] Answer[removed] Answer[removed] Answer[removed] RentAnswer[removed] Answer[removed] Answer[removed] Answer[removed] InsuranceAnswer[removed] Answer[removed] Answer[removed] Answer[removed] InterestAnswer[removed] Answer[removed] Answer[removed] Answer[removed] Total expensesAnswer[removed] Answer[removed] Answer[removed] Answer[removed] Net income$Answer[removed] $Answer[removed] $Answer[removed] $Answer[removed] (f) Prepare a budgeted balance sheet as of June 30, 2010.Peyton Department Store Budgeted Balance Sheet June 30, 2010AssetsLiabilities and Equity Cash$Answer[removed] Merchandise payable$Answer[removed] Accounts receivableAnswer[removed] Dividend payableAnswer[removed] InventoryAnswer[removed] Rent payableAnswer[removed] Prepaid insuranceAnswer[removed] Loans payableAnswer[removed] FixturesAnswer[removed] Interest payableAnswer[removed] Total assets$Answer[removed] Stockholders’ equityAnswer[removed] Total liab. & equity$Answer[removed]
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 2
0
10.
|
PEYTON DEPARTMENT STORE 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 |
|||||||
|
Total assets |
$84,000 |
Total liabilities and equity |
Actual and forecasted sales for selected months in 2010 are as follows:
|
Month |
Sales Revenue |
|
|
January |
$ 70,000 |
|
|
February |
50,000 |
|
| March | ||
|
April |
||
|
May |
60,000 |
|
|
June |
70,000 | |
|
July |
90,000 |
|
|
August |
80,000 |
Monthly operating expenses are as follows:
|
Wages and salaries |
||
|
Depreciation |
100 |
|
|
Utilities |
||
| Rent |
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.
|
Peyton Department Store |
||||||||||||||||||||||||||||||||
|
April |
May |
June |
Total |
|||||||||||||||||||||||||||||
|
Budgeted purchases |
$
Answer |
(b) Prepare a cash receipts schedule for each month of the second quarter ending June 30, 2010. Do not include borrowings.
|
Peyton Department Store Receipts Quarter Ending June 30, 2010 |
|
Total cash receipts |
(c) Prepare a cash disbursements schedule for each month of the second quarter ending June 30, 2010. Do not include repayments of borrowings.
|
Peyton Department Store Disbursements Quarter Ending June 30, 2010 |
|
Total cash disbursements |
(d) Prepare a cash budget for each month of the second quarter ending June 30, 2010. Include budgeted borrowings and repayments.
|
Peyton Department Store |
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Cash balance, beginning |
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| Receipts | Answer | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Disbursements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Excess receipts over disb. |
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Balance before borrowings |
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Borrowings |
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|
Loan repayments |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Cash balance, ending |
(e) Prepare an income statement for each month of the second quarter ending June 30, 2010.
|
Peyton Department Store |
| Sales |
|
Cost of sales |
|
Gross profit |
|
Operating expenses: |
| Insurance |
|
Interest |
|
Total expenses |
|
Net income |
(f) Prepare a budgeted balance sheet as of June 30, 2010.
|
Peyton Department Store |
|
|
Liabilities and Equity |
|
|
Merchandise payable |
|
|
Dividend payable |
|
|
Prepaid insurance |
Loans payable |
|
Interest payable |
|
|
Total liab. & equity |
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