4/1/2016 Chap 7 COMPREHENSIVE PROBLEM ACCT2012 Princ of Managerial Accounting: S
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4/1/2016 Chap 7 COMPREHENSIVE PROBLEM ACCT2012 Princ of Managerial Accounting: Spring 2016 ON-LINE Chrystal Richter Chap 7 COMPREHENSIVE PROBLEM instructions I help ue: 50.00 points Problem 7-23A Preparing a master budget for retail company with no beginning account balances LO 7-2, 7- 3, 7-4,7-5,7-6 Haas Company is a retail company that specializes in selling outdoor camping equipment. The company is considering opening a new store on October 1, 2015. The company president formed a planning committee to prepare a master budget for the first three months of operation. As budget coordinator, you have been assigned the following tasks Required a.&b.; October sales are estimated to be $250,000 of which 40 percent will be cash and 60 percent will be credit. The company expects sales to increase at the rate of 8 percent per month. The company expects to collect 100 percent of the accounts receivable generated by credit sales in the month following the sale. Prepare a sales budget and a schedule of cash receipts October November December Sales Budget Cash sales Sales on account Total budgeted sales Schedule of Cash Receipts Current cash sales Plus collections from A/R Total collections c.&d.; The cost of goods sold is 60 percent of sales. The company desires to maintain a minimum ending inventôry equal to 10 percent of the next month's cost of goods sold. Ending inventory of December is expected to be $12,000. The company pays 70 percent of accounts payable in the month of purchase and the remaining 30 percent in the following month. Assume that all purchases are made on account. Prepare an inventory purchases budget and a cash payments budget for inventory purchases. (Round your answers to the nearest whole dollar amount.) http://ezto.mheducation.com/hm.tpx?0.3248567919422166 1459548461635 1/5Explanation / Answer
Ans 1 Budgeted Cash Receipt Oct Nov Dec Total Sales in value 250000 270000 291600 811600 SCHEDULE OF EXPECTED CASH COLLECTIONS: Oct Nov Dec Total Current cash sale 100000 108000 116640 324640 Collection from Accounts Receivable 150000 162000 312000 Total cash collections 100000 258000 278640 636640 Cash Disbursement Oct Nov Dec Total Finished Goods Cost of Good sold 60% of sales 125000 135000 145800 405800 Closing Inventory 10% of next month COGS 13500 14580 0 0 Total Finised Googd 138500 149580 145800 405800 Less: Beginning Inventory 0 13500 14580 0 Total Purchase price A 138500 136080 131220 405800 Cash Disbursement Oct Nov Dec Total 70% in same month 96950 95256 91854 284060 30% in next month 0 41550 40824 82374 Total B 96950 136806 132678 366434 Cash Expenses Cash payment of purchases 96950 136806 132678 366434 Selling & administration Expenses Sales Commissions @ 5% 12500 13500 14580 40580 Supplies 2% 5000 5400 5832 16232 Salaries 18000 18000 18000 54000 Utilities 1400 1400 1400 4200 Rent 4800 4800 4800 14400 Missecelenous Expenses 1200 1200 1200 3600 Total 42900 44300 45812 133012 Oct Nov Dec Total Selling & administration Expenses Sales Commissions @ 5% 0 12500 13500 26000 Supplies 2% 0 5000 5400 10400 Salaries 18000 18000 18000 54000 Utilities 1400 1400 1400 4200 Rent 4800 4800 4800 14400 Missecelenous Expenses 1200 1200 1200 3600 Total S & administrative payments 25400 42900 44300 112600 Equipment purchased 164000 164000 G COMPANY CASH BUDGET FOR THE 3 MONTHS ENDING DECEMBER 31 Oct Nov Dec Totalk Cash balance 0 12650 12000 0 Add collections from customers 100000 258000 278640 636640 Total cash available 100000 270650 290640 636640 Less disbursements Merchandise purchases 96950 136806 132678 366434 Sales Commissions @ 5% 0 12500 13500 26000 Supplies 2% 0 5000 5400 10400 Salaries 18000 18000 18000 54000 Utilities 1400 1400 1400 4200 Rent 4800 4800 4800 14400 Missecelenous Expenses 1200 1200 1200 3600 Equipment Purchase 164000 164000 Total disbursements 286350 179706 176978 643034 Excess (deficiency) of receipts -186350 90944 113662 113662 over disbursements Less: Minimum Cash Balance 12000 12000 12000 12000 Total cash balance( needed)/Excess -198350 78944 101662 101662 Financing: Borrowings 199000 Repayments -74964 -100422 -100422 Interest -3980 -1240 -1240 (199000-74964))*0.01 Total financing 199000 -78944 -101662 -101662 Cash balance, ending (withminimum balance) 12650 12000 12000 12000 Income Statement as on 31 December Oct Nov Dec Total Sales 250000 270000 291600 811600 Less: variable Cost Cost of Good Sold 125000 135000 145800 405800 Gross Profit 125000 135000 145800 405800 Selling & administration Expenses Sales Commissions @ 5% 12500 13500 14580 40580 Supplies 2% 5000 5400 5832 16232 Salaries 18000 18000 18000 54000 Utilities 1400 1400 1400 4200 Rent 4800 4800 4800 14400 Depreciation 4000 4000 4000 12000 Interest On Short Term Loan 1990 1990 1240 5220 Missecelenous Expenses 1200 1200 1200 3600 Total 48890 50290 51052 150232 Net Operating Income 76110 84710 94748 255568 Balance sheet as on 31 december Assets Cash 12000 12000 Accounts Receivable (296100*60%) 177660 177660 Inventory 12000 12000 Fixed assets Store Fixtures 164000 Less: Accumulated Depreciation 12000 Fixed assets 152000 Total Fixed assets 353660 Liabilities Current Liabilities Accounts payable (143220*.3) 42966 42966 Short term Borrowings 18394 18394 Accured Liabilities (14580+5832) 20412 20412 Equity Retained earnings 255568 Total 337339.6 Statement of Cash Flows as on December Cash flows from operating activities $ Cash receipts from customers 636,640 Cash paid to suppliers 366,434 Cash paid towards expenses 112600 Cash paid towards interest 5,220 Cash generated from operations 152,385.64 Net cash from operating activities 152,386 Cash flows from investing activities Purchase of Property and Plant 164000 Sale proceed - Net cash used in investing activities (164,000) Cash flows from financing activities Repayment of Long term debt 175,385.64 Cash Dividend - Proceeds from borrowings 199000 Net cash used in financing activities 23,614.36 Net increase in cash and cash equivalents 12,000.00 Cash and cash equivalents at beginning of period - Cash and cash equivalents at end of period 12,000.00
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