Question

a. Sales are 60% cash and 40% credit. Credit sales are collected 20% in the month of sale and the remainder in the month after sale. Actual sales in December were $56,000. Schedules of budgeted sales for the two months of the upcoming year are as follows: Budgeted Sales Revenue January ................ $62,000 February .............. $72,000 b. Actual purchases of direct materials in December were $23,000. The company's purchases of direct materials in January are budgeted to be $20,000 and $28,000 in February. All purchases are paid 50% in the month of purchase and 50% the following month. c. Salaries and sales commissions are also paid half in the month earned and half the next month. Actual salaries were $9,500 in December. Budgeted salaries in January are $10,500 and February budgeted salaries are $12,000. Sales commissions each month are 12% of that month's sales. d. Rent expense is $3,500 per month. e. Depreciation is $2,300 per month. f. Estimated income tax payments are made at the end of January. The estimated tax payment is projected to be $12,500. g. The cash balance at the end of the prior year was $20,000.

Answer 1

Α C D E F Requirement la: John's restaurant supply Cash collection budget For the months ended jan 31 and feb28 January February Total Cash sales(60%) $ 37,200 $ 43,200 $ 80,400 collection credit sales $ 22,400 $ 24,800 $ 47,200 Total cash collections $ 59,600 $ 68,000 $ 127,600 Requirement 1b: John's restaurant supply Cash payments for material budget For the months ended jan 31 and feb28 January February Total 50% of current month DM purchases $ 10,000 $ 14,000 $ 24,000 50% of last month's DM purchases $ 11,500 $ 10,000 $ 21,500 Total cash payments $ 21,500 $ 24,000 $ 45,500

А B E Total Requirement 1c: John's restaurant supply Cash payments for operating budget For the months ended jan 31 and feb28 January February variable cash operating expenses : Sales commissions-dec 3,360 $ - Sales commissions-jan 3,720 $ 4,320 Sales commissions-feb - $ 3,720 Total variable cash operating expenses : $ 7,080 $ 8,040 $ $ $ $ 3,360 8,040 3,720 15,120 101 Fixed cash operating expenses Sales salaries-dec $ Sales salaries-jan $ Sales salaries-feb $ Rentexpense $ Tax expense $ Total fixed cash operating expenses $ Total cash payments for operating expenses $ 102 4,750 $ 5,250 $ - $ 3,500$ 12,500 $ 26,000 $ 33,080 $ - 6,000 5,250 3,500 - 14,750 22,790 $ 4,750 $ 11,250 $ 5,250 $ 7,000 $ 12,500 $ 40,750 $ 55,870 103 104 105 106

107 108 109 110 111 112 113 D E F G Requirement 2: John's restaurant supply Combined cash budget For the months ended jan 31 and feb28 January February 2 months Beginning cash balance $ 20,000 $ 25,020 $ 20,000 Plus: cash collections from customers $ 59,600 $ 68,000 $ 127,600 Totalcash available $ 79,600 $ 93,020 $ 147,600 Less: cash payments: direct material purchases $ 21,500 $ 24,000 $ 45,500 operating expenses $ 33,080 $ 22,790 $ 55,870 Total cash payments $ 54,580 $ 46,790 $ 101,370 Ending cash balance $ 25,020 $ 46,230 $ 46,230 114 115 116 117 118 119 120

F Requirementia: John's restaurant supp Cash collection budget For the months ended January =62000*0.6 =56000*0.4 =+D71+D72 Cash sales(60%) collection credit sales Total cash collections February =72000*0.6 =62000*0.4 =+E71+E72 Total =+D71+E71 =+D72+E72 =+F71+F72 Requirement 1b: John's restaurant supp Cash payments for ma For the months ended January February Total 50% of current month DM purchases =20000*0.5 =28000*0.5 =+D82+E82 50% of last month's DM purchases Total cash payments =23000*0.5 =+D82+D83 =20000*0.5 =+E82+E83 =+D83+E83 =+F82+F83

Α D E F B Requirement 1c: 87 John's restaurant supp Cash payments for ope For the months ended January February Fehr Total variable cash operating expense Sales commissions-dec Sales commissions-jan Sales commissions-feb Total variable cash operating ex 1=56000*0.12 00 =+E93+F93 =62000*0.12*d=72000*0.12*0]=+E94+F94 =62000*0.12*0 =+E95+F95 =+E93+E94+E91=+F93+F94+F99=+G93+G94+G95 Fixed cash operating expenses Sales salaries-dec Sales salaries-jan Sales salaries-feb Rentexpense Tax expense Total fixed cash operating exper Total cash payments for operati 102 =9500*0.5 0 =+E99+F99 =10500*0.5 =12000*0.5 =+E100+F100 =10500*0.5 =+E101+F101 3500 =+E102+F102 12500 =+E103+F103 =+SUM(E99:E1 =+SUM(F99:F1q=+SUM(G99:G103) =+E96+E104 1=+F96+F104 =+G96+G104 3500 103 vynense 104 105 106

А D Requirement 2: John's restaurant supp Combined cash budge For the months ended 110 111 113 January February 2 months 20000 =+E119 20000 59600 68000 =+E113+F113 =+E112+E113 =+F112+F113 =+G112+G113 114 115 116 Beginning cash balance Plus: cash collections from custo Totalcash available Less: cash payments: direct material purchases operating expenses Total cash payments Ending cash balance 21500 33080 =+E116+E117 =+E114-E118 24000 22790 =+F116+F117 =+F114-F118 =+E116+F116 =+E117+F117 =+E118+F118 =+G114-G118 118 119 120