Macheski Company, an importer and retailer of Polish pottery and kitchenware, pr
ID: 2397869 • Letter: M
Question
Macheski Company, an importer and retailer of Polish pottery and kitchenware, prepares a monthly master budget. Data for the July master budget are given below:
The June 30th balance sheet follows:
Cash $ 25,000 Accounts payable $ 45,000
Accounts receivable 110,000 Capital stock 300,000
Inventory 54,000 Retained earnings 94,000
Building and equipment (net) 250,000
Actual sales for June and budgeted sales for July, August, and September are given below:
June $137,500
July 360,000
August 400,000
September 320,000
Sales are 20 percent for cash and 80 percent on credit. All credit sales are collected in the month following the sale. There are no bad debts.
The gross margin percentage is 40 percent of sales. The desired ending inventory is equal to 25 percent of the following month's COGS. One fourth of the purchases are paid for in the month of purchase and the others are purchased on account and paid in full the following month.
The monthly cash operating expenses are $43,000, and the monthly depreciation expenses are $7,000.
8. Refer to Figure 8-7. What is the balance of the accounts receivable at the end of July?
a. $110,000
b. $288,000
c. $360,000
d. $398,000
9. Refer to Figure 8-7. What is the balance of the accounts payable at the end of July?
a. $55,500
b. $93,000
c. $120,000
d. $166,500
10. Refer to Figure 8-7. What is the balance of the inventory account at the end of July?
a. $54,000
b. $60,000
c. $124,000
d. $216,000
11. Refer to Figure 8-7. What is the balance of the building and equipment (net) account at the end of July?
a. $243,000
b. $250,000
c. $257,000
d. $300,000
13. Refer to Figure 8-7. What is the balance of the cash account at the end of July?
a. $8,500
b. $15,500
c. $62,500
d. $114,000
14. Refer to Figure 8-7. What are the total assets at the end of July?
a. $439,000
b. $446,500
c. $515,500
d. $653,500
Explanation / Answer
8. Option B
the balance of the accounts receivable at the end of July = 80% of July Sales = 80% * 360000 = $288000
9. Option D.
Purchases for the Month of July = COGS + Closing Inventory - Opening Inventory
Purchases for the Month of July = $360000 * 60% + $400000 * 60% * 25% - $54000
Purchases for the Month of July = $216000 + $60000- $54000 = $222000
Accounts payable for the month of july = $222000 * 3 / 4 = $166500
10. Option B
Balance of Inventory account in July = August sales * 60% * 25% = $400000 * 60% * 25% = $60000
11. Option A
Building and Equip. balance = Book Value - Depreciation = $250000 - $7000 = $243000
13. Option C.
Cash Account Balance = Opening Balance + Collections from customers - payments to supplies - operating expenses
Cash Account Balance = $25000 + $110000 + $72000 - $45000 - $55500 - $43000 =$62500
14. Option D.
Total Assets at the end of July = Inventory + Cash + AR + Building
Total Assets at the end of July = $60000 + $62500 + $288000 + $243000
Total Assets at the end of July = $653500
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