Question

The first attached page is the details. The last three are the master budget that needs to be completed. Please use the master budget provided so i can understand. The steps on the master budget are labled 1-7. Thank you

...) 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: Sales in Units .......... April 800 May 1,000 June 600 July 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. 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 - Cash budget, including information on the loan balance

Answer 1

1. Sales Budget

	Period 1	Period 2	Period 3	Period 4
Projected Unit Sales	800	1000	600	1200
X Selling Price per unit	$ 40	$ 40	$ 40	$ 40
Projected Sales	$ 32000	$ 40000	$ 24000	$ 48000

2. Schedule of Cash Receipts

	Period 1	Period 2	Period 3
Budgeted Sales	$ 32000	$ 40000	$ 24000
Ending accounts receivables	$ 12800	$ 16000	$ 9600
Cash Receipts
Cash Sales	$ 19200	$ 24000	$ 14400
Collection of Receivables(Balance)	$ 12000	$ 0	$ 0
Collection of Month of Sales	$ 0	$ 0	$ 0
Collection 1st Month after Sales	$ 0	$ 12800	$ 16000
Collection 2nd Month after Sales	$ 0	$ 0	$ 0
Collection 3rd Month after Sales	$ 0	$ 0	$ 0
	$ 31200	$ 36800	$ 30400

3. Merchandise Purchases Budget

	Period 1	Period 2	Period 3
Next period’s unit sales	1000	600	1200
X Ending Inventory Percent	60%	60%	60%
Desired Ending Inventory based on sales	600	360	720
+ Safety Stock	0	0	0
=Desired Ending Inventory	600	360	720
+Current period’s unit sales	800	1000	600
=Units to be available	1400	1360	1320
-Beginning Inventory	480	600	360
=Units to be Purchased	920	760	960
X Budgeted Cost per unit	$ 20	$ 20	$ 20
=Projected Purchases(used in payment Schedule)	$ 18400	$ 15200	$ 19200

              

4. Schedule of cash Disbursements for purchases of merchandise

	Period 1	Period 2	Period 3
Inventory Purchased	$ 18400	$ 15200	$ 19200
Cash Payment : Month of Purchase	$   9200	$ 7600	$ 9600
Cash Payment : 1st Month after Purchase	$ 11000	$ 9200	$ 7600
Cash Payment : 2nd Month after Purchase	$         0	$       0	$       0
Total Cash Payments in cash Budget	$ 20200	$ 16800	$ 17200