P9-62A Combined cash budget and a budgeted balance sheet (Learning Objective 3)

Question

P9-62A Combined cash budget and a budgeted balance sheet (Learning Objective 3) Hugo Medical Supply has applied for a loan. Pacific Commerce Bank has requested a budgeted balance sheet as of April 30 and a combined cash budget for April. As Hugo Medical Supply's controller, you have assembled the following information: a March 31 equipment balance, $52,600; accumulated depreciation, $41,300 b. April capital expenditures of $42,400 budgeted for cash purchase of equipment c. April depreciation expense, $700 Cost of goods sold, 60% of sales e. Other April operating expenses, including income tax, total $14,200, 35% of which will be paid in cash and the remainder accrued at April 30 f. March 31 owners' equity, $92,600 g. March 31 cash balance, $40,300 h. April budgeted sales, $90,000, 70% of which is for cash. Of the remaining 30%, half will be collected in April and half in May. i. April cash collections on March sales, $29,100 j. April cash payments of March 31 liabilities incurred for March purchases of inventory, $17,300 k. March 31 inventory balance, S29,200 1. April purchases of inventory, $10,700 for cash and $36,300 on credit. Half of the credit purchases will be paid in April and half in May.

Explanation / Answer

Hugo Medical Supply Balance Sheet as at 31 March 0.6 Budgeted balance sheet as of April 30 Assets Assets Equipment 93900 Equipment 93900 Accumulated Depn 41300 52600 Additions 42400 Owners Equity 92600 136300 Accum Depn 42000 94300 April Budgeted sales 90000 Inventory 29200 Cost of sales 54000 Purchases Apr Gross Profit 36000 Cash 10700 Operating Exp 14200 Credit 36300 Depreciation 700 76200 Net profit 21100 less Cost of Sales 54000 Budgeted Inventory 22200 22200 Debtors Cash Op Bal 40300 Receipts: March Sales 29100 April Sales Budgeted 90000 Cash 63000 63000 Collections April Credit Sales 27000 Collected April 13500 13500 Total receipts 145900 Payments: Cap Exp 42400 42400 Expenses: Total 14200 Paid in April 4970 4970 Accrued 9230 Total payments 47370 Closing cash balance 98530 Budgeted debtors calculation 31-Mar Credit sales Calculation of debtors 31 Mar Assets Equipment 52600 Inventory 29200 Cash 40300 Liabilities Creditors Cash payments March 17300 03/31/2017Balance 34600 purchases Purchases April Cash 10700 Credit 36300 Payments to creditors 35450 Balance Apr 35450 Owners Equity April Balance March 92600 add Net profit Apr 21100 Balance April 113700

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