Question

answere 14 to 16

The Bandeiras Company, a merchandising firm, has budgeted its activity for December according to the following information: I. Sales at $550,000, all for cash. II. Merchandise inventory on November 30 was $300,000. III. Budgeted depreciation for December is $35,000. IV. The cash balance at December 1 was $25,000. V. Selling and administrative expenses are budgeted at $60,000 for December and are paid in cash. VI. The planned merchandise inventory on December 31 is $270,000. VII. The invoice cost for merchandise purchases represents 75% of the sales price. All purchases are paid for in cash.

Answer 1

Answer C $550,000 Budgeted Cash Receipts Cash Sales $550,000 As there is no other receipts, cash sales represents the entire cash receipts Answer L C $ 472,500 Budgeted Cash Disbursments Cash purchases $ 550000 *75% $ 550000 Selling and administratie expenses paid Total cash disbursments $ $ $ 412,500 60,000 472,500

16) Answer L a $ 12,500 Budgeted Net Income $ $ $ 550,000 (442,500) 107,500 Sales Less: Cost of Goods Sold Gross margin Less: Operating expenses Selling and adminstrative expenses Depreciation expense Net Income $ $ (60,000) (35,000) $ $ (95,000) 12,500 Working Note: Cost of Goods Sold Beginning inventory Add: Purchases Less : Ending inventory Cost of Goods Sold $ $ $ $ 300,000 412,500 (270,000) 442,500