- Silver Company makes a product with peak sales in May of each year. Its sales budget for the second quarter is given below:
| April | May | June | Total | |
| Budgeted sales (all on account) | $ 350,000 | $ 550,000 | $ 190,000 | $ 1,090,000 |
The company estimates 25% of a month’s sales are collected in the month of sale, another 70% are collected in the month following sale, and the remaining 5% are collected in the second month following sale. Bad debts are negligible and can be ignored. February sales totaled $280,000, and March sales totaled $310,000.
Required:
- Prepare a schedule of expected cash collections from sales, by month and in total, for the second quarter.
- What is the accounts receivable balance on June 30th?
- Down Under Products’ sales budget for the next four months is as follows:
| Unit Sales | |
| April | 90,000 |
| May | 95,000 |
| June | 130,000 |
| July | 100,000 |
The company wants its ending inventory levels to equal 20% of the following month’s unit sales. The inventory at the end of March was 18,000 units.
Required:
Prepare a production budget, by month and in total, for the second quarter.
- Garden Depot is a retailer that provided the following budgeted cash flows for next year:
| 1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | |
| Total cash receipts | $ 350,000 | $ 470,000 | $ 400,000 | $ 420,000 |
| Total cash disbursements | $ 393,000 | $ 363,000 | $ 353,000 | $ 373,000 |
The company’s beginning cash balance for next year will be $20,000. The company requires a minimum cash balance of $10,000 and may borrow money at the beginning of any quarter and may repay any part of its loans at the end of any quarter. Interest payments, based on a quarterly interest rate of 3%, are due on any principal at the time it is repaid. For simplicity, assume interest is not compounded.
Required:
Prepare the company’s cash budget for next year.
Note: Repayments, interest, and cash deficiencies should be indicated by a minus sign.
- Gig Harbor Boating is the wholesale distributor of a recreational sailboat. Management provided the following data for budgeting purposes:
| Budgeted unit sales | 840 |
| Selling price per unit | $ 2,140 |
| Cost per unit | $ 1,700 |
| Variable selling and administrative expense (per unit) | $ 85 |
| Fixed selling and administrative expense (per year) | $ 225,000 |
| Interest expense for the year | $ 30,000 |
Required:
Prepare a budgeted income statement for the year.
Mecca Copy, a photocopying center located on University Avenue, provided the following data to prepare a budgeted balance sheet for next year:
| Ending Balances | |
| Cash | ?question mark |
| Accounts receivable | $ 9,700 |
| Supplies inventory | $ 3,800 |
| Equipment | $ 42,000 |
| Accumulated depreciation | $ 17,000 |
| Accounts payable | $ 3,400 |
| Common stock | $ 5,000 |
| Retained earnings | ?question mark |
The beginning balance of retained earnings was $33,000, budgeted net income is $16,900, and budgeted dividends are $3,500.
Required:
Prepare the company’s budgeted balance sheet.
Note: Amounts to be deducted should be indicated by a minus sign.