Nordic Company, a merchandising company, prepares its master budget on a quarter
ID: 2423764 • Letter: N
Question
Nordic Company, a merchandising company, prepares its master budget on a quarterly basis. The
following data have been assembled to assist in preparation of the master budget for the second quarter.
As of March 31 (the end of the prior quarter). the company's balance sheet showed the following account
balances:
Actual sales for March and budgeted sales for April-July are as follows:
Cash 9000
Accounts receivable 48,000
Inventory 12600
Buildings and equipment (net) 214,100
Accounts Payable 18300
Capital stock 190,000
Retained earnings 75,400
283,700 283,700
Actual sales for march and budgeted sales for april-july are as follows:
March (actual) 60,000
April 70,000
May 85,000
June 90,000
July 50,000
Sales are 20% for cash and 80% on credit. All payments on credit sales are collected in t he month
following the sale. The accounts receivable at March 31 are a result of March credit sales.
The company's gross margin percentage is 40% of sales. (In other words. cost of goods sold is 60% of
sales.)
Monthly selling and administrative expenses are budgeted as follows: salaries and wages, $7,500 per month; shipping, 6% of sales; advertising, $6,000 per month; other expenses. 4% of sales. Depreciation. including depreciation on new assets acquired during the quarter, will be $6,000 for the quarter.
Each month's ending inventory should equal 30% of the following month's cost of goods sold.
Half of a month's inventory purchases are paid for in the month of purchase and half in the following
month.
Equipment purchases during the quarter will be as follows: April. $11,500: and May. $3,000.
Dividends totaling $3,500 will be declared and paid in June.
Management wants to maintain a minimum cash balance of $8,000.The company has an agreement with a local bank that allows the company to borrow in increments of $1.000 at the beginning of each month, up to a total loan balance of $20,000. The interest rate on these loans is 1% per month, and for simplicity, we will assume that interest is not compounded.
The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter
Required:
Using the data above, complete the following statements and schedules for the second quarter:
a merchandise purchases budget:
april may june total
Nordic Company, a merchandising company, prepares its master budget on a quarterly basis. The
following data have been assembled to assist in preparation of the master budget for the second quarter.
As of March 31 (the end of the prior quarter). the company's balance sheet showed the following account
balances:
Actual sales for March and budgeted sales for April-July are as follows:
Cash 9000
Accounts receivable 48,000
Inventory 12600
Buildings and equipment (net) 214,100
Accounts Payable 18300
Capital stock 190,000
Retained earnings 75,400
283,700 283,700
Actual sales for march and budgeted sales for april-july are as follows:
March (actual) 60,000
April 70,000
May 85,000
June 90,000
July 50,000
Sales are 20% for cash and 80% on credit. All payments on credit sales are collected in t he month
following the sale. The accounts receivable at March 31 are a result of March credit sales.
The company's gross margin percentage is 40% of sales. (In other words. cost of goods sold is 60% of
sales.)
Monthly selling and administrative expenses are budgeted as follows: salaries and wages, $7,500 per month; shipping, 6% of sales; advertising, $6,000 per month; other expenses. 4% of sales. Depreciation. including depreciation on new assets acquired during the quarter, will be $6,000 for the quarter.
Each month's ending inventory should equal 30% of the following month's cost of goods sold.
Half of a month's inventory purchases are paid for in the month of purchase and half in the following
month.
Equipment purchases during the quarter will be as follows: April. $11,500: and May. $3,000.
Dividends totaling $3,500 will be declared and paid in June.
Management wants to maintain a minimum cash balance of $8,000.The company has an agreement with a local bank that allows the company to borrow in increments of $1.000 at the beginning of each month, up to a total loan balance of $20,000. The interest rate on these loans is 1% per month, and for simplicity, we will assume that interest is not compounded.
The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter
Required:
Using the data above, complete the following statements and schedules for the second quarter:
Nordic Company, a merchandising company, prepares its master budget on a quarterly basis. The
following data have been assembled to assist in preparation of the master budget for the second quarter.
As of March 31 (the end of the prior quarter). the company's balance sheet showed the following account
balances:
Actual sales for March and budgeted sales for April-July are as follows:
Cash 9000
Accounts receivable 48,000
Inventory 12600
Buildings and equipment (net) 214,100
Accounts Payable 18300
Capital stock 190,000
Retained earnings 75,400
283,700 283,700
Actual sales for march and budgeted sales for april-july are as follows:
March (actual) 60,000
April 70,000
May 85,000
June 90,000
July 50,000
Sales are 20% for cash and 80% on credit. All payments on credit sales are collected in t he month
following the sale. The accounts receivable at March 31 are a result of March credit sales.
The company's gross margin percentage is 40% of sales. (In other words. cost of goods sold is 60% of
sales.)
Monthly selling and administrative expenses are budgeted as follows: salaries and wages, $7,500 per month; shipping, 6% of sales; advertising, $6,000 per month; other expenses. 4% of sales. Depreciation. including depreciation on new assets acquired during the quarter, will be $6,000 for the quarter.
Each month's ending inventory should equal 30% of the following month's cost of goods sold.
Half of a month's inventory purchases are paid for in the month of purchase and half in the following
month.
Equipment purchases during the quarter will be as follows: April. $11,500: and May. $3,000.
Dividends totaling $3,500 will be declared and paid in June.
Management wants to maintain a minimum cash balance of $8,000.The company has an agreement with a local bank that allows the company to borrow in increments of $1.000 at the beginning of each month, up to a total loan balance of $20,000. The interest rate on these loans is 1% per month, and for simplicity, we will assume that interest is not compounded.
The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter
Required:
Using the data above, complete the following statements and schedules for the second quarter:
Nordic Company, a merchandising company, prepares its master budget on a quarterly basis. The
following data have been assembled to assist in preparation of the master budget for the second quarter.
As of March 31 (the end of the prior quarter). the company's balance sheet showed the following account
balances:
Actual sales for March and budgeted sales for April-July are as follows:
Cash 9000
Accounts receivable 48,000
Inventory 12600
Buildings and equipment (net) 214,100
Accounts Payable 18300
Capital stock 190,000
Retained earnings 75,400
283,700 283,700
Actual sales for march and budgeted sales for april-july are as follows:
March (actual) 60,000
April 70,000
May 85,000
June 90,000
July 50,000
Sales are 20% for cash and 80% on credit. All payments on credit sales are collected in t he month
following the sale. The accounts receivable at March 31 are a result of March credit sales.
The company's gross margin percentage is 40% of sales. (In other words. cost of goods sold is 60% of
sales.)
Monthly selling and administrative expenses are budgeted as follows: salaries and wages, $7,500 per month; shipping, 6% of sales; advertising, $6,000 per month; other expenses. 4% of sales. Depreciation. including depreciation on new assets acquired during the quarter, will be $6,000 for the quarter.
Each month's ending inventory should equal 30% of the following month's cost of goods sold.
Half of a month's inventory purchases are paid for in the month of purchase and half in the following
month.
Equipment purchases during the quarter will be as follows: April. $11,500: and May. $3,000.
Dividends totaling $3,500 will be declared and paid in June.
Management wants to maintain a minimum cash balance of $8,000.The company has an agreement with a local bank that allows the company to borrow in increments of $1.000 at the beginning of each month, up to a total loan balance of $20,000. The interest rate on these loans is 1% per month, and for simplicity, we will assume that interest is not compounded.
The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter
Required:
Using the data above, complete the following statements and schedules for the second quarter:
total
Where the budgeted cost of goods sold for april is 70,000 sales multipled by 60% giving you 42,000 and then for may is 51,000 multiplied by 30% giving you 15,300.
part B includes a schedule of expected cash disbursements for merchandise purchases:
18,300
I need help completing these two tables.
april may junetotal
budgeted cost of goods sold 42,000 51,000 add desired ending inventory 15,300 total needs 57,300 less beginning inventory 12,600 required purchases 44,700Explanation / Answer
total
Where the budgeted cost of goods sold for april is 70,000 sales multipled by 60% giving you 42,000 and then for may is 51,000 multiplied by 30% giving you 15,300.
part B includes a schedule of expected cash disbursements for merchandise purchases:
18,300
april may junetotal
budgeted cost of goods sold 42,000 51,000 90,000*60%=54,000 147,000 add desired ending inventory 15,300 54000*30%=16,200 50,000*60%*30%=9,000 40,500 total needs 57,300 67,200 63,000 187,500 less beginning inventory 12,600 15,300 16,200 44,100 required purchases 44,700 51,900 46,800 143,400Related Questions
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