Survey Of Accounting
5th Edition
ISBN: 9781259631122
Author: Edmonds, Thomas P.
Publisher: Mcgraw-hill Education,
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Chapter 14, Problem 22P
Problem 7-22A Preparing budgets with multiple products
Jasper Fruits Corporation wholesales peaches and oranges. Barbara Jasper is working with the company’s accountant to prepare next year’s budget. Ms. Jasper estimates that sales will increase 5 percent for peaches and 10 percent for oranges. The current year’s sales revenue data follow:
| First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Total | |
| Peaches | $ 80,000 | $100,000 | $160,000 | $140,000 | $ 480,000 |
| Oranges | 200,000 | 225,000 | 285,000 | 190,000 | 900,000 |
| Total | $280,000 | $325,000 | $445,000 | $330,000 | $1,380,000 |
Based on the company’s past experience, cost of goods sold is usually 60 percent of sales revenue. Company policy is to keep 10 percent of the next period’s estimated cost of goods sold as the current period’s ending inventory. (Hint: Use the cost of goods sold for the first quarter to determine the beginning inventory for the first quarter.)
Required
- a. Prepare the company’s sales budget for the next year for each quarter by individual product.
- b. If the selling and administrative expenses are estimated to be $350,000, prepare the company’s
budgeted annual income statement. - c. Ms. Jasper estimates next year’s ending inventory will be $10,000 for peaches and $20,000 for oranges. Prepare the company’s inventory purchases budgets for the next year, showing quarterly figures by product.
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Students have asked these similar questions
Problem #6: Operating Budgets
Cathy’s Cookies produces cookies for resale at local grocery stores. The company is currently in the process of establishing a master budget on a quarterly basis for this coming fiscal year, which ends December 31. Prior year quarterly sales were as follows (1 unit = 1 batch):
First quarter: 8,000 units
Second quarter: 9,600 units
Third quarter: 12,000 units
Fourth quarter: 10,400 units
Unit sales are expected to increase 20%, and each unit is expected to sell for $5. Management prefers to maintain ending finished goods inventory equal to 15% of next quarter's sales. Assume finished goods inventory at the end of the fourth quarter budget period is estimated to be 2,000 units.
Required:
1) Prepare a sales budget for Cathy’s Cookies.
(2) Prepare a production budget for Cathy’s Cookies.
(3) What can you interpret about Cathy’s Cookies Sales Budget? Trends?
Problem 7-17A (Algo) Preparing a sales budget and schedule of cash receipts LO 7-2
Thornton Pointers Corporation expects to begin operations on January 1, year 1, it will operate as a specialty sales company that sells
laser pointers over the Internet. Thornton expects sales in January year 1 to total $400,000 and to increase 20 percent per month in
February and March. All sales are on account. Thornton expects to collect 66 percent of accounts receivable in the month of sale, 24
percent in the month following the sale, and 10 percent in the second month following the sale.
Required
a. Prepare a sales budget for the first quarter of year 1.
b. Determine the amount of sales revenue Thornton will report on the year 1 first quarterly pro forma income statement.
c. Prepare a cash receipts schedule for the first quarter of year 1.
d. Determine the amount of accounts receivable as of March 31, year 1.
Complete this question by entering your answers in the tabs below.
Required A Required B…
Question 2
A. The Rilex and Chill Coffee Shop has requested a cash budget for August. After
examining the records of the company, you find the following:
1.
Cash balance on 1 August is RM43,280.
2. Actual sales for June and July are as follows:
June
RM
Cash sales
Credit sales
Total sales
10,200
26,100
36,300
July
RM
14,700
33,900
48,600
3. Credit sales are collected over three months: 30% in the month of sales, 40% in the
second month, and 25% in the third month. The customers who paid in the month of
sales are qualified for 3% discounts on the amount owed. While the sales collected in the
third month are subject to a 2% late fee, which is paid by those customers in addition to
what they owe. The remaining sales are uncollectible.
4. Inventory purchases average 80% of a month's total sales. Of those purchases, 60% are
paid for in the month of purchase. The remaining 40% is paid for in the following month.
5.
Salaries and wages total RM13,800 per month.
6. The company received interest…
Chapter 14 Solutions
Survey Of Accounting
Ch. 14 - Prob. 1QCh. 14 - Prob. 2QCh. 14 - 3.What are the three levels of planning? Explain...Ch. 14 - 4.What is the primary factor that distinguishes...Ch. 14 - 5.What is the advantage of using a perpetual...Ch. 14 - Prob. 6QCh. 14 - Prob. 7QCh. 14 - 8. Ken Shilov, manager of the marketing...Ch. 14 - Prob. 9QCh. 14 - 10.What is the normal starting point in developing...
Ch. 14 - 11. How does the level of inventory affect the...Ch. 14 - 12.What are the components of the cash budget?...Ch. 14 - 13.The primary reason for preparing a cash budget...Ch. 14 - 14.What information does the pro forma income...Ch. 14 - 15.How does the pro forma statement of cash flows...Ch. 14 - Exercise 7-1A Budget responsibility Teresa...Ch. 14 - Exercise 7-2A Preparing a sales budget Parliament...Ch. 14 - Prob. 3ECh. 14 - Exercise 7-4A Preparing sales budgets with...Ch. 14 - Exercise 7-5A Determining cash receipts from...Ch. 14 - Exercise 7-6A Using judgment in making a sales...Ch. 14 - Exercise 7-7A Preparing an inventory purchases...Ch. 14 - Exercise 7-8A Preparing a schedule of cash...Ch. 14 - Exercise 7-9A Determining the amount of expected...Ch. 14 - Exercise 7-10A Preparing inventory purchases...Ch. 14 - Exercise 7-11A Preparing a schedule of cash...Ch. 14 - Prob. 12ECh. 14 - Exercise 7-13A Preparing a cash budget The...Ch. 14 - Exercise 7-14A Determining amount to borrow and...Ch. 14 - Prob. 15ECh. 14 - Problem 7-16A Behavioral impact of budgeting...Ch. 14 - Prob. 17PCh. 14 - Problem 7-18A Preparing an inventory purchases...Ch. 14 - Prob. 19PCh. 14 - Problem 7-21A Preparing a cash budget Fayette...Ch. 14 - Prob. 21PCh. 14 - Problem 7-22A Preparing budgets with multiple...Ch. 14 - Problem 7-23A Preparing a master budget for retail...Ch. 14 - ATC 7-1 Business Applications Case Preparing and...Ch. 14 - ATC7-2 Group Assignment Master budget and pro...Ch. 14 - ATC 7-4 Writing Assignment Continuous budgeting...Ch. 14 - Ethical Dilemma Bad budget system or unethical...
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