Developing a Master Budget
for a Merchandising Organization
Peyton Department Store prepares budgets quarterly. The following
information is available for use in planning the second quarter
budgets for 2010.
PEYTON DEPARTMENT STORE Balance Sheet March 31, 2010 |
|||
---|---|---|---|
Assets |
Liabilities and Stockholders' Equity |
||
Cash | $4,000 |
Accounts payable |
$26,000 |
Accounts receivable | 25,000 |
Dividends payable |
17,000 |
Inventory | 30,000 |
Rent payable |
3,000 |
Prepaid Insurance | 2,000 |
Stockholders' equity |
40,000 |
Fixtures | 25,000 | ||
Total assets | $86,000 |
Total liabilities and equity |
$86,000 |
Actual and forecasted sales for selected months in 2010 are as follows:
Month | Sales Revenue |
---|---|
January | $40,000 |
February | 50,000 |
March | 40,000 |
April | 50,000 |
May | 60,000 |
June | 70,000 |
July | 90,000 |
August | 80,000 |
Monthly operating expenses are as follows:
Wages and salaries | $26,000 |
Depreciation | 100 |
Utilities | 1,000 |
Rent | 3,000 |
Cash dividends of $17,000 are declared during the third month of
each quarter and are paid during the first month of the following
quarter. Operating expenses, except insurance, rent, and
depreciation are paid as incurred. Rent is paid during the
following month. The prepaid insurance is for five more months.
Cost of goods sold is equal to 50 percent of sales. Ending
inventories are sufficient for 120 percent of the next month's
sales. Purchases during any given month are paid in full during the
following month. All sales are on account, with 50 percent
collected during the month of sale, 40 percent during the next
month, and 10 percent during the month thereafter. Money can be
borrowed and repaid in multiples of $1,000 at an interest rate of
12 percent per year. The company desires a minimum cash balance of
$4,000 on the first of each month. At the time the principal is
repaid, interest is paid on the portion of principal that is
repaid. All borrowing is at the beginning of the month, and all
repayment is at the end of the month. Money is never repaid at the
end of the month it is borrowed.
(a) Prepare a purchases budget for each month of the second quarter
ending June 30, 2010.
Peyton Department Store Monthly Purchase Budget Quarter Ending June 30, 2010 |
||||
---|---|---|---|---|
April | May | June | Total | |
Budgeted purchases | Answer | Answer | Answer | Answer |
(b) Prepare a cash receipts schedule for each month of the second quarter ending June 30, 2010. Do not include borrowings.
Peyton Department Store Schedule of Monthly Cash Receipts Quarter Ending June 30, 2010 |
||||
---|---|---|---|---|
April | May | June | Total | |
Total cash receipts | Answer | Answer | Answer | Answer |
(c) Prepare a cash disbursements schedule for each month of the second quarter ending June 30, 2010. Do not include repayments of borrowings.
Peyton Department Store Schedule of Monthly Cash Disbursements Quarter Ending June 30, 2010 |
||||
---|---|---|---|---|
April | May | June | Total | |
Total cash disbursements | Answer | Answer | Answer | Answer |
(d) Prepare a cash budget for each month of the second quarter ending June 30, 2010. Include budgeted borrowings and repayments.
Only use negative signs, if needed, for: excess receipts over disbursements, balance before borrowings and cash balances (beginning and ending).
Peyton Department Store Monthly Cash Budget Quarter Ending June 30, 2010 |
||||
---|---|---|---|---|
April | May | June | Total | |
Cash balance, beginning | Answer | Answer | Answer | Answer |
Receipts | Answer | Answer | Answer | Answer |
Disbursements | Answer | Answer | Answer | Answer |
Excess receipts over disb. | Answer | Answer | Answer | Answer |
Balance before borrowings | Answer | Answer | Answer | Answer |
Borrowings | Answer | Answer | Answer | Answer |
Loan repayments | Answer | Answer | Answer | Answer |
Cash balance, ending | Answer | Answer | Answer | Answer |
(e) Prepare an income statement for each month of the second quarter ending June 30, 2010.
Only use negative signs to show net losses in income.
Peyton Department Store Budgeted Monthly Income Statements Quarter Ending June 30, 2010 |
||||
---|---|---|---|---|
April | May | June | Total | |
Sales | Answer | Answer | Answer | Answer |
Cost of sales | Answer | Answer | Answer | Answer |
Gross profit | Answer | Answer | Answer | Answer |
Operating expenses: | ||||
Wages and salaries | Answer | Answer | Answer | Answer |
Depreciation | Answer | Answer | Answer | Answer |
Utilities | Answer | Answer | Answer | Answer |
Rent | Answer | Answer | Answer | Answer |
Insurance | Answer | Answer | Answer | Answer |
Interest | Answer | Answer | Answer | Answer |
Total expenses | Answer | Answer | Answer | Answer |
Net income | Answer | Answer | Answer | Answer |
(f) Prepare a budgeted balance sheet as of June 30, 2010.
Peyton Department Store Budgeted Balance Sheet June 30, 2010 |
||||
---|---|---|---|---|
Assets | Liabilities and Equity | |||
Cash | Answer | Merchandise payable | Answer | |
Accounts receivable | Answer | Dividend payable | Answer | |
Inventory | Answer | Rent payable | Answer | |
Prepaid insurance | Answer | Loans payable | Answer | |
Fixtures | Answer | Interest payable | Answer | |
Total assets | Answer | Stockholders' equity | Answer | |
Total liab. & equity | Answer |
(a)
Peyton Department Store | ||||
Monthly Purchase Budget | ||||
Quarter Ending June 30, 2010 | ||||
April | May | June | Total | |
Budgeted purchases | 62000 | 72000 | 94000 | 228000 |
Working:
April | May | June | Total | |
Budgeted Sales | $ 50,000.00 | $ 60,000.00 | $ 70,000.00 | $ 180,000.00 |
Add: Desired Ending Inventory | $ 72,000.00 | $ 84,000.00 | $ 108,000.00 | $ 264,000.00 |
Less: Beginning Inventory | $ 60,000.00 | $ 72,000.00 | $ 84,000.00 | $ 216,000.00 |
Purchases | $ 62,000.00 | $ 72,000.00 | $ 94,000.00 | $ 228,000.00 |
(b)
Schedule of Monthly Cash Receipts | ||||
Quarter Ending June 30, 2010 | ||||
April | May | June | Total | |
Total cash receipts | 46000 | 54000 | 64000 | 164000 |
Working:
April | May | June | Total | |
Sales | $ 50,000.00 | $ 60,000.00 | $ 70,000.00 | $ 180,000.00 |
50% collected in the month of sale | $ 25,000.00 | $ 30,000.00 | $ 35,000.00 | $ 90,000.00 |
40$ in next month | $ 16,000.00 | $ 20,000.00 | $ 24,000.00 | $ 60,000.00 |
10% in 2nd month of sale | $ 5,000.00 | $ 4,000.00 | $ 5,000.00 | $ 14,000.00 |
Total Collection | $ 46,000.00 | $ 54,000.00 | $ 64,000.00 | $ 164,000.00 |
(c)
Peyton Department Store | ||||
Schedule of Monthly Cash Disbursements | ||||
Quarter Ending June 30, 2010 | ||||
April | May | June | Total | |
Total cash disbursements | $ 26,000.00 | $ 62,000.00 | $ 72,000.00 | $ 160,000.00 |
(d)
Peyton Department Store | ||||
Monthly Cash Budget | ||||
Quarter Ending June 30, 2010 | ||||
April | May | June | Total | |
Cash balance, beginning | $ 4,000.00 | $ 4,000.00 | $ 4,000.00 | $ 4,000.00 |
Receipts | $ 46,000.00 | $ 54,000.00 | $ 64,000.00 | $ 164,000.00 |
Total Receipts | $ 50,000.00 | $ 58,000.00 | $ 68,000.00 | $ 168,000.00 |
Disbursements | ||||
Purchases | $ 26,000.00 | $ 62,000.00 | $ 72,000.00 | $ 160,000.00 |
Cash Dividend | $ 17,000.00 | $ 17,000.00 | ||
Operating expenses | $ 27,000.00 | $ 27,000.00 | $ 27,000.00 | $ 81,000.00 |
Rent | $ 3000 | $ 3,000.00 | $ 3,000.00 | $ 6,000.00 |
Total Disbursement | $ 73,000.00 | $ 92,000.00 | $ 102,000.00 | $ 264,000.00 |
Excess receipts over disb. | $ (23,000.00) | $ (34,000.00) | $ (34,000.00) | $ (96,000.00) |
Balance before borrowings | $ (23,000.00) | $ (34,000.00) | $ (34,000.00) | $ (96,000.00) |
Borrowings | $ 27,000.00 | $ 38,000.00 | $ 38,000.00 | $ 100,000.00 |
Loan repayments | $ - | |||
Cash balance, ending | $ 4,000.00 | $ 4,000.00 | $ 4,000.00 | $ 4,000.00 |
Developing a Master Budget for a Merchandising Organization Peyton Department Store prepares budgets quarterly. The following...
Developing a Master Budget for a Merchandising Organization Peyton Department Store prepares budgets quarterly. The following information is available for use in planning the second quarter budgets for 2010. PEYTON DEPARTMENT STORE Balance Sheet March 31, 2010 Assets Liabilities and Stockholders' Equity Cash $4,000 Accounts payable $26,000 Accounts receivable 25,000 Dividends payable 17,000 Inventory 30,000 Rent payable 3,000 Prepaid Insurance 2,000 Stockholders' equity 40,000 Fixtures 25,000 Total assets $86,000 Total liabilities and equity $86,000 Actual and forecasted sales for selected...
Developing a Master Budget for a Merchandising Organization Peyton Department Store prepares budgets quarterly. The following information is available for use in planning the second quarter budgets for 2010. PEYTON DEPARTMENT STORE Balance Sheet March 31, 2010 Assets Liabilities and Stockholders' Equity Cash $3,000 Accounts payable $26,000 Accounts receivable 25,000 Dividends payable 17,000 Inventory 30,000 Rent payable 2,000 Prepaid Insurance 2,000 Stockholders' equity 40,000 Fixtures 25,000 Total assets $85,000 Total liabilities and equity $85,000 Actual and forecasted sales for selected...
Developing a Master Budget for a Merchandising Organization Dils Brother Department Store prepares budgets quarterly. The following information is available for use in planning the second quarter budgets for 2017. Dils Brother Department Store Balance Sheet March 31, 2017 Assets Liabilities and Stockholders' Equity Cash $ 4,000 Accounts payable $31,000 Accounts receivable 31,000 Dividends payable 15,000 Inventory 36,000 Rent payable 3,000 Prepaid Insurance 3,000 Stockholders' equity 50,000 Fixtures 25,000 Total assets $99,000 Total liabilities...
Developing a Master Budget for a Merchandising Organization Peyton Department Store prepares budgets quarterly. The following information is available for use in planning the second quarter budgets for 2010. PEYTON DEPARTMENT STORE Balance Sheet March 31, 2010 Assets Liabilities and Stockholders' Equity Cash $4,000 Accounts payable $26,000 Accounts receivable 25,000 Dividends payable 17,000 Inventory 30,000 Rent payable 3,000 Prepaid Insurance 2,000 Stockholders' equity 40,000 Fixtures 25,000 Total assets $86,000 Total liabilities and equity $86,000 Actual and forecasted sales for selected...
Developing a Master Budget for a Merchandising Organization Dils Brother Department Store prepares budgets quarterly. The following information is available for use in planning the second quarter budgets for 2017. Dils Brother Department Store Balance Sheet March 31, 2017 Assets Liabilities and Stockholders' Equity Cash $4,000 Accounts payable $31,000 Accounts receivable 31,000 Dividends payable 15,000 Inventory 36,000 Rent payable 3,000 Prepaid Insurance 3,000 Stockholders' equity 50,000 Fixtures 25,000 Total assets $99,000 Total liabilities and equity $99,000 Actual and forecasted sales...
Developing a Master Budget for a Merchandising Organization Peyton Department Store prepares budgets quarterly. The following information is available for use in planning the second quarter budgets for 2010. PEYTON DEPARTMENT STORE Balance Sheet March 31, 2010 Assets Liabilities and Stockholders' Equity Cash $4,000 Accounts payable $26,000 Accounts receivable 25,000 Dividends payable 17,000 Inventory 30,000 Rent payable 3,000 Prepaid Insurance 2,000 Stockholders' equity 40,000 Fixtures 25,000 Total assets $86,000 Total liabilities and equity $86,000 Actual and forecasted sales for selected...
Developing a Master Budget for a Merchandising Organization Dils Brother Department Store prepares budgets quarterly. The following information is available for use in planning the second quarter budgets for 2017. Dils Brother Department Store Balance Sheet March 31, 2017 Assets Liabilities and Stockholders' Equity Cash $ 4,000 Accounts payable $31,000 Accounts receivable 31,000 Dividends payable 15,000 Inventory 36,000 Rent payable 3,000 Prepaid Insurance 3,000 Stockholders' equity 50,000 Fixtures 25,000 Total assets $99,000 Total liabilities and equity $99,000 Actual and forecasted...
Developing a Master Budget for a Merchandising Organization Dils Brother Department Store prepares budgets quarterly. The following information is available for use in planning the second quarter budgets for 2017. Dils Brother Department Store Balance Sheet March 31, 2017 Assets Liabilities and Stockholders' Equity Cash $ 4,000 Accounts payable $31,000 Accounts receivable 31,000 Dividends payable 15,000 Inventory 36,000 Rent payable 3,000 Prepaid Insurance 3,000 Stockholders' equity 50,000 Fixtures 25,000 Total assets $99,000 Total liabilities and equity $99,000 Actual and forecasted...
Developing a Master Budget for a Merchandising Organization Dils Brother Department Store prepares budgets quarterly. The following information is available for use in planning the second quarter budgets for 2017 Dils Brother Department Store Balance Sheet March 31, 2017 Liabilities and Stockholders' Equity Assets Cash $4,000 Accounts payable $31,000 Dividends payable 15,000 Accounts recelvable 31,000 Rent payable Inventory 36,000 3,000 Prepaid Insurance Stockholders' equity 3,000 50,000 Fixtures 25,000 Total liabilities and equity $99,000 Total assets $99,000 Actual and forecasted sales...
Developing a Master Budget for a Merchandising Organization Dils Brother Department Store prepares budgets quarterly. The following information is available for use in planning the second quarter budgets for 2017. Dils Brother Department Store Balance Sheet March 31, 2017 Assets Liabilities and Stockholders' Equity Cash $ 4,000 Accounts payable $31,000 Accounts receivable 31,000 Dividends payable 15,000 Inventory 36,000 Rent payable 3,000 Prepaid Insurance 3,000 Stockholders' equity 50,000 Fixtures 25,000 Total assets $99,000 Total liabilities and equity $99,000 Actual and forecasted...