Goldberg Company is a retail sporting goods store that uses an accrual accounting system. Facts regarding its operations follow:
Goldberg Company’s statement of financial position at the close of business on November 30 follows:
GOLDBERG COMPANY | |||
Statement of Financial Position | |||
November 30, 2019 | |||
Assets | |||
Cash | $ | 15,000 | |
Accounts receivable (net of $4,000 allowance for doubtful accounts) |
50,000 | ||
Inventory | 112,000 | ||
Property, plant, and equipment (net of $550,000 accumulated depreciation) |
930,000 | ||
Total assets | $ | 1,107,000 | |
Liabilities and Stockholders’ Equity | |||
Accounts payable | $ | 135,000 | |
Common stock | 800,000 | ||
Retained earnings | 172,000 | ||
Total liabilities and equity | $ | 1,107,000 | |
Required:
1. What is the total of budgeted cash collections for December?
2. How much is the book value of accounts receivable at the end of December?
3. How much is the income (loss) before income taxes for December?
4. What is the projected balance in inventory on December 31, 2019?
5. What are budgeted purchases for December?
6. What is the projected balance in accounts payable on December 31, 2019?
(For all requirements, Do not round intermediate calculations.)
1. | Budgeted cash collections for December | ** |
2. | Net accounts Receivable - December 31st | ** |
3 | * | ** |
4 | Budgeted inventory, December 31st | ** |
5 | Budgeted purchases during December | ** |
6 | Budgeted accounts payable, December 31st | ** |
*: Pre-tax operating income - December or Pre-tax operating loss - December
**: please answer
Requirement 1: Compute budgeted cash collections in December as follows
Particulars | Amount |
Budgeted cash collections in December: | |
Accounts receivables of November | $50,000 |
December sales ($200,000 × 50% × 99%) | $99,000 |
Total budgeted cash collections in December | $149,000 |
Requirement 2: Compute ending balance of accounts receivable in December as follows
Particulars | Amount |
Net accounts receivable in December: | |
Budged sales revenue | $200,000 |
Deduct: Allowance for doubtful accounts ($200,000 × 2%) | $4,000 |
Net accounts receivable from sales of December | $196,000 |
Accounts receivables collected in December ($200,000 × 50%) | $100,000 |
Total net accounts receivable ending balance in December | $96,000 |
Requirement 3: Compute net income before taxes for December as follows
Particulars | Amount | Amount |
Budgeted pre-tax operating income in December: | ||
Sales revenue | $200,000 | |
Cost of goods sold ($200,000 × (1 − 30%)) | $140,000 | |
Gross margin | $60,000 | |
Operating expenses | ||
Other operating expenses | $16,000 | |
Bad debt expense ($200,000 × 2%) | $4,000 | |
Depreciation expense ($150,000 ÷ 12) | $12,500 | |
Total operating expenses | $32,500 | |
Pre-tax operating income | $27,500 |
Requirement 4: Compute budgeted balance of ending inventory in December as follows
Particulars | Amount |
Budgeted ending inventory in December: | |
Inventory ($170,000 × 70% × 80%) | $95,200 |
Requirement 5: Compute budgeted purchases during December as follows
Particulars | Amount |
Budgeted purchases in December: | |
Cost of goods sold ($200,000 × (1 − 30%)) | $140,000 |
Add: Ending inventory | $95,200 |
Total inventory required | $235,200 |
Deduct: Beginning inventory | $112,000 |
Purchases during December | $123,200 |
Requirement 6: Compute ending balance of budgeted accounts payable in December as follows
Particulars | Amount |
Budgeted accounts payable in December: | |
Beginning balance of accounts payable | $135,000 |
Add: Purchases during December | $123,200 |
Total accounts payable | $258,200 |
Deduct: Payments made during December | $135,000 |
Ending balance of accounts Payable | $123,200 |
Goldberg Company is a retail sporting goods store that uses an accrual accounting system. Facts regarding...
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