Near the end of 2015, the management of Fancy Furnishings Co., a merchandising c
ID: 2485455 • Letter: N
Question
Near the end of 2015, the management of Fancy Furnishings Co., a merchandising company, prepared the following estimated balance sheet for December 31, 2015.
Prepare a master budget for each of the first three months of 2016; include the following component budgets (show supporting calculations as needed directly behind that budget, and round amounts to the nearest dollar):
1.) Monthly sales budgets (showing both budgeted unit sales and dollar sales).
2.) Monthly merchandise purchases budgets.
FANCY FURNISHINGS COMPANY Estimated Balance Sheet December 31, 2015 Liabilities and Equity Assets Cash Accounts receivable S35,500 Accounts payable S355,000 16,000 520,000 Bank loan payable 100.000 Taxes payable (due 655,500 Total liabilities 92,000 Inventory Total current assets Equipment Less accumulated depreciation 3/15/2016) $463,000 471,000 S541,000 67,625 Common stock 473,375 Retained earnings 194,875 Total stockholders' equity $1,128,875 Total liabilities and equity 665,875 $1,128,87;5 Total assets To prepare a master budget for January, February, and March of 2016, management gathers the following information. a. Fancy Furnishings' single product is purchased for $20 per unit and resold for $59 per unit. The expected inventory level of 5,000 units on December 31, 2015, is more than management's desired level for 2016, which is 20% of the next month's expected sales (in units). Expected sales are: January, 7,250 units; February, 9,500 units; March, 10,750 units; and April, 10,000 units. b. Cash sales and credit sales represent 25% and 75%, respectively, of total sales. Of the credit sales, 68% is collected in the first month after the month of sale and 32% in the second month after the month of sale. For the December 31, 2015, accounts receivable balance, S125,000 is collected in January and the remaining $395,000 is collected in FebruaryExplanation / Answer
Sales Budget Jan Feb March Total Sales in uniits 7250 9500 10750 27500 Sales price 59 59 59 59 Sales 427750 560500 634250 1622500 Cash Sale 106938 140125 158563 405625 Credit Sales 320813 420375 475688 1216875 Dec 125000 395000 520000 Jan 218153 102660 320813 Feb 285855 285855 mar 0 0 0 Total cash collections 231938 753278 547078 1532293 Working Mercandise Purchase Budget Jan Feb March Total April Sales in units 7250 9500 10750 27500 10000 Closing Inventory 20% of next month sales 1900 2150 2000 2000 Total Finised Googd 9150 11650 12750 29500 Less: Beginning Inventory 5000 1900 2150 5000 Required Inventory Purchase in units 4150 9750 10600 24500 Purchase price 20 20 20 20 Required Inventory Purchase 83000 195000 212000 490000 Cash Disbursement Jan Feb March Total Begnning Accounts Payable 90000 265000 0 355000 Jan 16600 66400 83000 Feb 39000 39000 Mar 0 0 0 0 Total B 90000 281600 105400 477000 CASH BUDGET FOR THE 3 MONTHS ENDING March 31 2016 April May June Total Beginning Cash balance 35000 19028 19028 35000 Add collections from customers 231938 753278 547078 1532293 Total cash available 266938 772306 566106 1567293 Less Cashdisbursements Purchase of Inventory 90000 281600 105400 477000 Sales commissions (20% odf sales) 46388 150656 109416 306459 Sales salaries 78000 78000 78000 234000 General and Administrative salaries 132000 132000 132000 396000 Maintainenece Expense 2200 2200 2200 6600 Eqipment Purchased 37000 95000 29000 161000 Land Purchases 0 0 175000 175000 Total disbursements 385588 739456 631016 1756059 Excess (deficiency) of receipts -118650 32850 -64910 -188766 over disbursements Less: Minimum Cash Balance 19028 19028 19028 19028 Total cash balance( needed)/Excess -137678 13822 -83938 -207794 Financing: Borrowings 137678 83938 221616 Repayments -12445 -12445 Interest -1377 -1376.78 Total financing 137678 -13822 83938 207794 Cash balance, ending 19028 19028 19028 19028
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.