The balance sheet of Snapshot, Inc., a distributor of photographic supplies, as

Question

The balance sheet of Snapshot, Inc., a distributor of photographic supplies, as of May 31 is given below: Snapshot, Inc. Balance Sheet May 31 Assets Cash Accounts receivable Inventory Buildings and equipment, net of depreciation $ 5,000 73.000 33,000 510,000 Total assets $ 621,000 Liabilities and Stockholders' Equity Accounts payable Note payable Capital stock Retained earnings 115,000 16.000 430,000 60,000 Total liabilities and stockholders' equity $ 621,000 The company is in the process of preparing a budget for June and has assembled the following data: a. Sales are budgeted at $260,000 for June. Of these sales, $50,000 will be for cash, the remainder will be credit sales. One-half of a month's credit sales are collected in the month the sales are made, and the remainder is collected the following month. All of the May 31 accounts receivable ill be collected in June Purchases of inventory are expected to total $150,000 during June. These purchases will all be on account. Forty percent of all inventory purchases are paid for in the month of purchase, the remainder are paid in the following month. All of the May 31 accounts payable to suppliers will be paid during June The June 30 inventory balance is budgeted at $30,000 b. C. d. Selling and administrative expenses for June are budgeted at $52,000, exclusive of depreciation. These e. The note payable on the May 31 balance sheet will be paid during June. The company's interest f. New warehouse equipment costing $4,000 will be purchased for cash during June expenses will be paid in cash. Depreciation is budgeted at $2,100 for the month expense for June (on all borrowing) will be $400, which will be paid in cash. g. During June, the company will borrow $19,000 from its bank by giving a new note payable to the bank for that amount. The new note will be due in one year. Required 1a. Prepare schedule of expected cash collections from sales and a schedule of expected cash disbursements for inventory purchases Snapshot, Inc. Schedule of Expected Cash Collections Cash sales-June S 50,000 Collections on accounts receivable May 31 balance 73,000 105,000 228,000 June Total cash receipts

Explanation / Answer

Required Budgets are as prepared below:

Snapshot Inc Schedule of expected Cash collections For the month ended June 30 Month Particulars June Sales 2,60,000 Cash sales - June 50,000 Credit sales May 73,000 June 1,05,000 Total collections 2,28,000 Account receivable for June sale 1,05,000 Snapshot Inc Schedule of expected Cash payments For the month ended June 30 Month Particulars June May 31 account payable balance $1,15,000 June purchases (150,000*.4) $60,000 Total payments $1,75,000 Account payable for June sales (150,000*.6) 90,000 Snapshot Inc Cash Budget For the month ended June 30 Month Particulars June Beginning Cash balance 5,000 Add: Collection from customers $2,28,000 cash available for use $2,33,000 Less: cash Disbursements Merchandise purchase $1,75,000 Selling and administrative 52,000 Equipment purchase 4,000 Total disbusrement 2,31,000 Cash surplus/Deficit 2,000 Financing    Borrowing 19,000    Repayment -16,000    Interest -400 Net cash from Financing 2,600 Budgeted ending cash balance 4,600 Snapshot Inc Budgeted Income Statement For the month ended June 30 Particulars Amount ($) Amount ($) Sales 2,60,000 Less: Cost of goods sold (33,000+150,000-30,000) 1,53,000 Gross margin 1,07,000 Less: Selling and administartive exp Depreciation 2,100 Selling and administrative 52,000 Net operating Income 52,900 Interest expense 400 Net Income 52,500 Snapshot Inc Budgeted balance Sheet Jun-30 Assets Cash 4,600 Accounts Receivable 1,05,000 Inventory 30,000 Buildings and equipment net of depreciation (510,000+4,000-2,100) 5,11,900 Total assets 6,51,500 Liabilities and Stockholders' Equity Accounts Payable purchases 90,000 Note payable 19,000 Capital Stock 4,30,000 Retained earnings (60,000+52,500) 1,12,500 Total liabilities and stockholders' equity 6,51,500

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