Managerial Accounting 1B Ch20

August

Use this information to determine October’s expected cash payments for purchases. (Omit the “$” sign in your response.)

  Cash

Sand Dollar Company purchases all merchandise on credit. It recently budgeted the following month-end accounts payable balances and merchandise inventory balances. Cash payments on accounts payable during each month are expected to be: May, $1,300,000;

June

, $1,450,000;

July

, $1,350,000; and August, $1,400,000.

Compute the budgeted amounts of merchandise purchases for June, July, and August. (Omit the “$” sign in your response.)

  Budgeted merchandise purchases

Compute the budgeted amounts of cost of goods sold for June, July, and August. (Omit the “$” sign in your response.)

  Budgeted cost of goods sold

Kool-Ray is preparing its master budget for the quarter ended September 30. Budgeted sales and cash payments for merchandise for the next three months follow:

Sales are 20% cash and 80% on credit. All credit sales are collected in the month following the sale. The June 30 balance sheet includes balances of $12,000 in cash; $45,000 in accounts receivable; $4,500 in accounts payable; and a $2,000 balance in loans payable. A minimum cash balance of $12,000 is required. Loans are obtained at the end of any month when a cash shortage occurs. Interest is 1% per month based on the beginning of the month loan balance and is paid at each month-end. If an excess balance of cash exists, loans are repaid at the end of the month. Operating expenses are paid in the month incurred and consist of sales commissions (10% of sales), office salaries ($4,000 per month), and rent ($6,500 per month).

(1)

Prepare a cash receipts budget for July, August, and September. (Input all amounts as positive values. Omit the “$” sign in your response.)

(2)

Prepare a cash budget for each of the months of July, August, and September. (Input all amounts as positive values. Round your answers to the nearest dollar amount. Leave no cells blank – be certain to enter “0” wherever required. Omit the “$” sign in your response.)

Near the end of 2011, the management of Simid Sports Co., a merchandising company, prepared the following estimated balance sheet for December 31, 2011.

January

,

February

, and

March

Simid Sports’ single product is purchased for $30 per unit and resold for $55 per unit. The expected inventory level of 2,500 units on December 31, 2011, is more than management’s desired level for 2012, which is 20% of the next month’s expected sales (in units). Expected sales are: January, 3,500 units; February, 4,500 units; March, 5,500 units; and April, 5,000 units.

Merchandise purchases are paid for as follows: 20% in the first month after the month of purchase and 80% in the second month after the month of purchase. For the December 31, 2011, accounts payable balance, $40,000 is paid in January and the remaining $140,000 is paid in February.

Sales commissions equal to 20% of sales are paid each month. Sales salaries (excluding commissions) are $30,000 per year.

General and administrative salaries are $72,000 per year. Maintenance expense equals $1,000 per month and is paid in cash.

Equipment reported in the December 31, 2011, balance sheet was purchased in January 2011. It is being depreciated over eight years under the straight-line method with no salvage value. The following amounts for new equipment purchases are planned in the coming quarter: January, $18,000; February, $48,000; and March, $14,400. This equipment will be depreciated under the straight-line method over eight years with no salvage value. A full month’s depreciation is taken for the month in which equipment is purchased.

The company plans to acquire land at the end of March at a cost of $75,000, which will be paid with cash on the last day of the month.

Simid Sports has a working arrangement with its bank to obtain additional loans as needed. The interest rate is 12% per year, and interest is paid at each month-end based on the beginning balance. Partial or full payments on these loans can be made on the last day of the month. The company has agreed to maintain a minimum ending cash balance of $12,500 in each month.

The income tax rate for the company is 40%. Income taxes on the first quarter’s income will not be paid until April 15.

Monthly sales budgets. (Omit the “$” sign in your response.)

SIMID SPORTS CO. Sales Budget January, February, and March 2012

Budgeted Units

Budgeted Unit Price

Total

  January 2012

  February 2012

  March 2012

  Total

SIMID SPORTS CO. Merchandise Purchases Budget January, February, and March 2012

  Next month’s budgeted sales

[removed]    

  Ratio of inventory to future sales

[removed] %

  Budgeted ending inventory

  Add: Budgeted sales

  Required units of available merchandise

  Deduct: Beginning inventory

  Units to be purchased

  Budgeted cost per unit

$ [removed]    

Monthly merchandise purchases budgets. (Units to be deducted should be indicated with a minus sign. Omit the “$” & “%” signs in your response.)

Monthly selling expense budgets. (Omit the “$” & “%” signs in your response.)

SIMID SPORTS CO. Selling Expense Budget January, February, and March 2012

  Budgeted sales

  Sales

  Sales commissions

  Sales salaries

  Total selling expenses

Monthly general and administrative expense budgets. (Do not round your intermediate calculations. Round your final answers to the nearest whole dollar. Omit the “$” sign in your response.)

SIMID SPORTS CO. General and Administrative Expense Budget January, February, and March 2012

  Salaries

  Maintenance

  Depreciation

  Total expenses

Monthly capital expenditures budgets. (Leave no cells blank – be certain to enter “0” wherever required. Input all amounts as positive values. Omit the “$” sign in your response.)

SIMID SPORTS CO. Capital Expenditures Budget January, February, and March 2012

  Equipment

  Land

Monthly cash budgets. (Leave no cells blank – be certain to enter “0” wherever required. Input all amounts as positive values except negative preliminary cash balance and repayment of loan to bank which should be indicated by a minus sign. Omit the “$” sign in your response.)

SIMID SPORTS CO. Cash Budget January, February, and March 2012

  Beginning cash balance

  Cash receipts from customers

  Total cash available

  Cash disbursements

  Payments for merchandise

  General & administrative salaries

  Maintenance expense

  Interest

  Taxes payable

  Purchases of equipment

  Purchase of land

  Total cash disbursements

  Preliminary cash balance

  Repayment of loan to bank

  Ending cash balance

  Loan balance, end of month

Budgeted income statement for the entire first quarter (not for each month). (Input all amounts as positive values. Omit the “$” sign in your response.)

SIMID SPORTS CO. Budgeted Income Statement For Three Months Ended March 31, 2012

  Cost of goods sold

  Gross profit

  Operating expenses

     Sales commissions

     Sales salaries

     General administrative salaries

     Maintenance expense

     Depreciation expense

     Interest expense

  Income before taxes

  Income taxes

  Net income

Budgeted balance sheet as of March 31, 2012. (Input all amounts as positive values. Be sure to list the assets in order of their liquidity. Leave no cells blank – be certain to enter “0” wherever required. Omit the “$” sign in your response.)

SIMID SPORTS CO. Budgeted Balance Sheet March 31, 2012

  Assets

  Accounts receivable

  Inventory

  Total Current Assets

  Less: Accumulated depreciation

  Total Assets

  Liabilities and Equity

  Accounts payable

  Bank loan payable

  Total Liabilities

  Common stock

  Retained earnings

  Total Stockholders’ Equity

  Total Liabilities & Equity