Question

Can you help me in part 2 Please.

Oxford, Inc., is preparing its master budget for the quarter ended June 30. It sells a single product for $40 each. Sales are 60% cash and 40% on credit. All credit sales are collected in the month following the sale. At March 31, the balance in accounts receivable is $12,000, which represents the uncollected balance on March sales, Budgeted sales for the next four months follow: Aon May June July Sales in Units ..........200 1,000.00 1.200 The product cost is $20 per unit, and desired ending inventory is 60% of the following month's sales in units. Inventory at March 31 is 480 units. Purchases are paid 50% in the month of purchase and 50% in the following month. At March 31, the balance in accounts payable is $11,000, which represents the unpaid purchases from March. Operating expenses are paid in the month incurred and consist of: Commissions (10% of sales) Shipping (3% of sales) Office salaries ($3,000 per month) - Rent ($5,000 per month) Depreciation is $2,000 per month. Income taxes are 40%, and will be paid on July 1. There are no taxes payable at March 31. A minimum cash balance of $12,000 is required, and the beginning cash balance is $12,000. Loans are obtained at the end of any month when a cash shortage occurs. Interest is 1% per month based on the beginning of the month loan balance and is paid at each month end. If the ending cash balance exceeds the minimum, the excess will be applied to repaying any outstanding loan balance. At March 31, the loan balance is $2,000. PART 1: Prepare a master budget (round all dollar amounts to the nearest whole dollar) for each of the months of April, May, and June that includes the: Sales budget Schedule of cash receipts • Merchandise purchases budget Schedule of cash disbursements for purchases of merchandise Schedule of cash disbursements for selling and administrative expenses (combined) - Cash budget, including information on the loan balance · Budgeted income statement for the quarter

Answer 1

a)

Sales Budget
S.No	Particulars	April	May	June	July
A	Budgeted Sales during the Month	800	1000	600	1200
B	Selling Price Per Unit	$40	$40	$40	$40
C	Budgeted Sales in $ ( A*B )	$32,000	$40,000	$24,000	$48,000

b)

Cash Collection Budget
S.No	Particulars	April	May	June	July
A	Total Budgeted Sales during the Month	$32,000	$40,000	$24,000	$48,000
B	Cash Sales during the Month( A*60%)	$19,200	$24,000	$14,400	$28,800
C	Credit Sales of Previous Month Collected(Note-1)(40%)	$12,000	$12,800	$16,000	$9,600
D	Toatl Cash Collections	$31,200	$36,800	$30,400	$38,400

c)

Merchandise Purchase Budget
S.No	Particulars	April	May	June
A	Budgeted Sales in Units during the Month	800	1000	600
B	Raw Material Requied for each unit (Assumption)	1	1	1
C	Raw Material Required for Budgeted Sales (A*B )	800	1000	600
D	Opening Stock of Raw material	480	600	360
E	Budgeted Sales Units of Following Month	1000	600	1200
G	Raw Material Required for Budgeted Sales of Following Month	1000	600	1200
H	Closing Stock to be maintained ( G*60%)	600	360	720
I	Material to be Purchased during the Month (C-D+H)(Pounds)	920	760	960
J	Material Perice Per Unit	$20	$20	$20
K	Material to be Purchased during the Month (I*J)(Value)	$18,400	$15,200	$19,200

d)

Schedule for Cash Disbursement for Purchases of Merchandise
S.No	Particulars	April	May	June
A	Material to be Purchased during the Month	920	760	960
B	Material Perice Per Unit	$20	$20	$20
C	Material to be Purchased during the Month (A*B)(Value)	$18,400	$15,200	$19,200
D	Cash Purchases ( C*50% )	$9,200	$7,600	$9,600
E	Credit Purchase of previous month paid in Current Month	$11,000	$9,200	$7,600
F	Total Cash Payments for Direct Materials during the Month	$20,200	$16,800	$17,200

e)

Schedule for Cash Disbursement for Selling and Adminstrative Expenses
S.No	Particulars	April	May	June
A	Total Budgeted Sales during the Month	$11,000	$9,200	$7,600
B	Sales Commission (A*10%)	$1,100	$920	$760
C	Shipping (A*3%)	$330	$276	$228
D	Office Salaries ($3000 Per Month)	$3,000	$3,000	$3,000
E	Rent ($5000 Per Month)	$5,000	$5,000	$5,000
F	Total Cash Payments for Selling and Admin Expenses during the Month	$9,430	$9,196	$8,988

f)

Combined Cash Budget
S.No	Particulars	April	May	June
A	Opening Cash	$12,000	$12,000	$22,350
B	Toatl Cash Collections	$31,200	$36,800	$30,400
C	Cash Payments:
D	Total Cash Payments for Direct Materials during the Month	$20,200	$16,800	$17,200
E	Total Cash Payments for Selling and Admin Expenses during the Month	$9,430	$9,196	$8,988
G	Opening Loan Balance	$2,000	$450	$0
H	Interest Payment( 1% Per Month)	$20	$5	$0
I	Total Cash Payments (D+E+F+G+H)	$29,650	$26,001	$26,188
J	Cash Balance (A+B-I)	$13,550	$22,800	$26,562
K	Minimum Cash Balance to be Maintained	$12,000	$12,000	$12,000
L	Loan to be taken (If I < J,J-I)	$0	$0	$0
N	Loan Repaymnet	$1,550	$450	$0
O	Closing Balance (J+L-N)	$12,000	$22,350	$26,562