DS Pharmacy sells a product that has a highly seasonal variation with peak sales occurring in the third quarter. The following information was given for expected sales data for the coming year 2020. The product of the pharmacy sells for $6.00 per unit. Budgeted sales for the next four quarters are as follows: - Quarters Budgeted Sales in Units i. ii. iii. iv. Sales are collected in the following pattern: 60% in the quarter the sales are made and the remaining 40% in the following quarter. V. 1 On January 1, 2020, the records showed 60 000 in accounts receivables as well as the following information. vi. 2 vii. 2020 3 4 50 000 70 000 120 000 60 000 Cash balance at January first was $38 000.00. Also, in the first quarter direct material cost $70 000.00, direct Labour cost $80 000.00, Administration expense $100 000.00, Taxes $10 000.00 and Advertising $15 000.00. Equipment was purchased in the first quarter for $50 000.00. Equipment purchases increased in the second quarter by 30%. No other equipment was purchased. A dividend of $16 000.00 is to be paid in the first quarter and fourth quarter only. Administration Expenses rose by 25% in the second quarter, 20% in the third, quarter and 10% in the fourth quarter. The increased in expenses was based on the previous quarter figures. For financing purposes, a loan of $85 000.00 was received in the first quarter and $40 000.00 in the second quarter. In the third quarter the $85 000.00 loan with interest of $3 000.00 were repaid and in the fourth quarter the $40 000.00 loan with interest of $6 000.00 were repaid. Direct materials and Direct labour increased each quarter by $15 000 and 10 000 respectively.
DS Pharmacy sells a product that has a highly seasonal variation with peak sales occurring in the third quarter. The following information was given for expected sales data for the coming year 2020. The product of the pharmacy sells for $6.00 per unit. Budgeted sales for the next four quarters are as follows: - Quarters Budgeted Sales in Units i. ii. iii. iv. Sales are collected in the following pattern: 60% in the quarter the sales are made and the remaining 40% in the following quarter. V. 1 On January 1, 2020, the records showed 60 000 in accounts receivables as well as the following information. vi. 2 vii. 2020 3 4 50 000 70 000 120 000 60 000 Cash balance at January first was $38 000.00. Also, in the first quarter direct material cost $70 000.00, direct Labour cost $80 000.00, Administration expense $100 000.00, Taxes $10 000.00 and Advertising $15 000.00. Equipment was purchased in the first quarter for $50 000.00. Equipment purchases increased in the second quarter by 30%. No other equipment was purchased. A dividend of $16 000.00 is to be paid in the first quarter and fourth quarter only. Administration Expenses rose by 25% in the second quarter, 20% in the third, quarter and 10% in the fourth quarter. The increased in expenses was based on the previous quarter figures. For financing purposes, a loan of $85 000.00 was received in the first quarter and $40 000.00 in the second quarter. In the third quarter the $85 000.00 loan with interest of $3 000.00 were repaid and in the fourth quarter the $40 000.00 loan with interest of $6 000.00 were repaid. Direct materials and Direct labour increased each quarter by $15 000 and 10 000 respectively.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
Create a schedule of cash collection using both pi
Transcribed Image Text:viii
Rent was charged at $ 20 000.00 quarterly.
Transcribed Image Text:PART A
DS Pharmacy sells a product that has a highly seasonal variation with peak sales occurring in
the third quarter. The following information was given for expected sales data for the coming
year 2020. The product of the pharmacy sells for $6.00 per unit. Budgeted sales for the next
four quarters are as follows: -
Quarters
Budgeted
Sales in Units
i.
ii.
iii.
iv.
V.
1
Sales are collected in the following pattern: 60% in the quarter the sales are made and the
remaining 40% in the following quarter.
vi.
2
On January 1, 2020, the records showed 60 000 in accounts receivables as well as the following
information.
vii.
2020
3
50 000 70 000 120 000
4
60 000
Cash balance at January first was $38 000.00. Also, in the first quarter direct
material cost $70 000.00, direct Labour cost $80 000.00, Administration expenses
$100 000.00, Taxes $10 000.00 and Advertising $15 000.00.
Equipment was purchased in the first quarter for $50 000.00. Equipment
purchases increased in the second quarter by 30%. No other equipment was
purchased.
A dividend of $16 000.00 is to be paid in the first quarter and fourth quarter only.
Administration Expenses rose by 25% in the second quarter, 20% in the third,
quarter and 10% in the fourth quarter. The increased in expenses was based on the
previous quarter figures.
For financing purposes, a loan of $85 000.00 was received in the first quarter and
$40 000.00 in the second quarter.
In the third quarter the $85 000.00 loan with interest of $3 000.00 were repaid and
in the fourth quarter the $40 000.00 loan with interest of $6 000.00 were repaid.
Direct materials and Direct labour increased each quarter by $15 000 and
10 000 respectively.
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