70.2K

Verified Solution

Link Copied!

Budget Data

XYZ Co$.$

Assets as at March $31,2011$ Liabilities and Equity as at March $31,2011$

Cash $6000$ Accounts Payable $9000$

Accounts Receivable $21000$ Lease Payable $12000$

Inventory$($note $1)16000$

Prepaid Supplies $800$ Owners Equity $57800$

Equipment $35000$

Total Assets $78800$ Total Liabilities and Equity $78800$

Required:

Prepare a Quarterly Master budget for XYZ Co$.$ For the months of April, May and June, Up to and Including the Income Statement

Notes:

$1)$ Inventory as at March $31,2011$ consists of $6,400$ pens at a cost of $$2,50$ per pen.

$2)$ XYZ Co$.$ sells boxes at a selling price per pen is: $$7\mathrm{.}50$

$3)$ Expected Sales in units:

April $10,000$

May $12,000$

June $9,000$

July $8,000$

August $13,000$

$4)$ All sales are on credit and are collected as follows:

Month of Sale $75\%$

Month after Sale $25\%$

There are no bad debts

$5)$ The Wholesale cost per box is: $$2\mathrm{.}50$

$6)$ Payments for wholesale purchases are:

Month of Purchase $70\%$

Month after Purchase $30\%$

$7)$ Desired Ending Inventory is $15\%$ of next months sales

$8)$ Operating expenses monthly are:

Wages $$11,000\mathrm{.}00$

Freight $1\%$ of sales

Rent $$3,000\mathrm{.}00$

Depreciation $$1,200\mathrm{.}00$

Miscellaneaous $$500\mathrm{.}00$

$7)$ Office Equipment is purchased in April for: $$50,000$

$8)$ Monthly minimum cash balance required $$5,000\mathrm{.}00$

Monthly interest on borrowed funds: $1\%$

Assume funds are borrowed at the beginning

of the month that they are needed and repaid at the end

of the month where excess cash permits repayment

Assume simple interest rate, no compounding

Interest is repaid at the time of the loan repayment

Need help with the Cash disbursements for purchases?

Answer & Explanation Solved by verified expert

See Answer