Question

Specific instructions: Study the required resources of the module and particularly the illustrative exercise 16.1 to perform this exercise. Carefully read the financial and operational data of the JKL Corporation provided below and use them to prepare the budget for: Quarter Sales Charges (10 points) Purchases for the quarter (10 points) Disbursements on purchases for the quarter (10 points) • Disbursements of administrative and sales gastoes for the quarter (10 points) JKL Corporation JKL Financial and Operational Data The JKL Corporation is engaged in the buying and selling business and is designing its master budget for the next quarter of operations from April to June 20xx. The data collected and necessary to work with such a budget are as follows: A. Certain data from the Statement of Information(Balance Sheet)as of March 31, 20xx: Dr. Cr. $20,000 $64,000 $15,400 $225,000 Cash Accounts receivable Inventory Buildings and equipment (net depreciation) Accounts payable Long-term debt Common shares - capital Retained earnings Total $23,400 $90,000 $150,000 $61,000 $324,400 $324,400

note: requirements or parts to be done are indicated above at "specific instructions"

note: number 5: Expected monthly expenses are: salaries $8000;advertisement $ 4000 per month

Answer 1

1. Sales Budget -

Sales Budget April May June Quarter $ 65,000 $ 70,000 $ 75,000 $ 210,000 Expected Sales

2. Expected Cash Collection -

Accounts Receivable April May June Expected Cash Collection April May June Quarter $ 64,000 $ 64,000 $ 13,000 $ 52,000 $ 65,000 $ 14,000 $ 56,000 $ 70,000 $ 15,000 $ 15,000 Total Cash Collection $ 77,000 $ 66,000 $ 71,000 $ 214,000

3. Purchases for the quarter -

Cost of Goods Sold (+) Closing Inventory Total Needs (-) Beginning Inventory Purchases for the quarter April May June Quarter $ 45,500 $ 49,000 $ 52,500 $147,000 $ 12,250 $ 13,125 $ 8,750 $ 8,750 $ 57,750 $ 62,125 $ 61,250 $ 155,750 $ 15,400 $ 12,250 $ 13,125 $ 15,400 Purchase $ 42,350 $ 49,875 $ 48,125 $140,350

4. Disbursement on purchases for the quarter -

Disbursement on purchases for the quarter April May June Quarter Accounts Payable $ 23,400 $ 23,400 April $ 16,940 $ 25,410 $ 29,925 $ 72,275 May $ 19,950 $ 19,950 June $ 19,250 $ 19,250 Total Cash Payments $ 40,340 $ 45,360 $ 49,175 $134,875

5. Disbursement of administrative and sales gastoes for the quarter -

Disbursement of administrative and sales gastoes for the quarter April May June Quarter Salaries $ 8,000 $ 8,000 $ 8,000 $ 24,000 Advertisement $ 4,000 $ 4,000 $ 4,000 $ 12,000 Other Expenses $ 4,550 $ 4,900 $ 5,250 $ 14,700 Total Disbursement $ 16,550 $ 16,900 $ 17,250 $ 50,700

6. Cash Buadget -

Cash Buadget April May June Quarter $ 20,000 $ 20,110 $ 20,850 $ 20,000 $ 77,000 $ 66,000 $ 71,000 $ 214,000 Cash Balance, Beginning Cash Receipts Total Cash Available $ 97,000 $ 86,110 $ 91,850 $234,000 Less: Cash Disbursement Inventory Purchase $ 40,340 $ 45,360 $ 49,175 $134,875 Administrative and Sales gastoes $ 16,550 $ 16,900 $ 17,250 $ 50,700 Dividend Paid $ $ $ 2,500 $ 2,500 Equipment Purchase $ 20,000 $5,000 $ $ 25,000 Total Cash Disbursements $ 76,890 $ 67,260 $ 68,925 $ 213,075 Cash Surplus/ (Deficit) $ 20,110 $ 18,850 $ 22,925 $ 20,925 Financing: Borrowings Repayments Interest Total Financing $ 2,000 $ 2,000 $ 2,000) $ (2,000) $ (20) $ (20) $ 2,000 $2,020) $ (20) $ Cash Balance Ending $ 20,110 $ 20,850 $ 20,905 $ 20,905

Working Notes -

Working Notes March April May June July Expected Sales $ 80,000 $ 65,000 $ 70,000 $ 75,000 $50,000 Cash Sales Credit Sales 20% 80% $ 16,000 $13,000 $14,000 $ 15,000 $10,000 $ 64,000 $ 52,000 $ 56,000 $ 60,000 $ 40,000 Credit Collection 100% $ 64,000 $ 52,000 $ 56,000 $ 60,000 Cost of Goods Sold 70% $ 56,000 $ 45,500 $ 49,000 $ 52,500 $ 35,000 25% Closing Inventory Beginning Inventory $ 11,375 $ 12,250 $ 13,125 $ 8,750 $ 15,400 $ 12,250 $ 13,125 $ 8,750 Purchase $ 42,350 $ 49,875 $ 48,125 Credit Payments In the same month In the following month 40% 60% $ 16,940 $ 19,950 $ 19,250 $ 23,400 $ 25,410 $ 29,925 $ 28,875 Monthly Expenses: Salaries Advertisement Other Expenses $ 8,000 $ 8,000 $ 8,000 $ 8,000 $ 4,000$ 4,000 $ 4,000 $ 4,000 $ 5,600 $ 4,550 $ 4,900 $5,250 7% $ 10,000 Depreciation Expense Dividend Paid Equipment Purchase $ 2,500 $ 20,000 $5,000 Cash Balance $ 8,000