assembled to assist in preparing the master budget for the first quarter: a. As of December 31 (the end of the prior quarter), the company's general ledger showed the following account balances: Cash Accounts receivable Inventory Buildings and equipment (net) Accounts payable Common stock Retained earnings Debits. $ 58,000 Credits 214,400 60,450 368,000 $ 90,525 500,000 110,325 $ 700,850 $ 700,850 b. Actual sales for December and budgeted sales for the next four months are as follows: December (actual) January February March April $ 268,000 $ 403,000 $ 600,000 $ 315,000 $ 211,000 c. Sales are 20% for cash and 80% on credit. All payments on credit sales are collected in the month following sale. The accounts receivable at December 31 are a result of December credit sales. d. The company's gross margin is 40% of sales. (In other words, cost of goods sold is 60% of sales.) e. Monthly expenses are budgeted as follows: salaries and wages, $33,000 per month: advertising, $63,000 per month; shipping, 5% of sales; other expenses, 3% of sales. Depreciation, including depreciation on new assets acquired during the quarter, will be $44,980 for the quarter. f. Each month's ending inventory should equal 25% of the following month's cost of goods sold.
assembled to assist in preparing the master budget for the first quarter: a. As of December 31 (the end of the prior quarter), the company's general ledger showed the following account balances: Cash Accounts receivable Inventory Buildings and equipment (net) Accounts payable Common stock Retained earnings Debits. $ 58,000 Credits 214,400 60,450 368,000 $ 90,525 500,000 110,325 $ 700,850 $ 700,850 b. Actual sales for December and budgeted sales for the next four months are as follows: December (actual) January February March April $ 268,000 $ 403,000 $ 600,000 $ 315,000 $ 211,000 c. Sales are 20% for cash and 80% on credit. All payments on credit sales are collected in the month following sale. The accounts receivable at December 31 are a result of December credit sales. d. The company's gross margin is 40% of sales. (In other words, cost of goods sold is 60% of sales.) e. Monthly expenses are budgeted as follows: salaries and wages, $33,000 per month: advertising, $63,000 per month; shipping, 5% of sales; other expenses, 3% of sales. Depreciation, including depreciation on new assets acquired during the quarter, will be $44,980 for the quarter. f. Each month's ending inventory should equal 25% of the following month's cost of goods sold.
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter8: Budgeting
Section: Chapter Questions
Problem 6PB: Budgeted income statement and balance sheet As a preliminary to requesting budget estimates of...
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