Question

Cascade Corporation's president has asked you to prepare a master budget for the first three months (April, May, and June) of Year 2004, based on the following information: 1. Prepare a Sales Budget. April sales are estimated to be $400,000, of which $300,000 will be cash sales and $300,000 will be on credit. The company expects to grow 10% per month in sales. 2. Prepare a schedule of cash receipts. The company expects to collect 100% of the accounts receivable generated by credit sales in the month following the sale. 3. Prepare an inventory purchases budget. The cost of goods sold is 60% of sales. The company policy is to budget an ending inventory balance equal to 25% of the next month's projected cost of goods sold. Assume the company expects July cost of goods sold to be $314,000. Assume that all purchases are made on account. 4. Prepare a cash payments budget for inventory purchases. The company pays 70% of accounts payable in the month of purchase and the remaining 30% in the following month. 5. Prepare a selling and administrative expenses budget. Use the following information to prepare the budget: Salary expense (fixed) $24,000 Sales commissions 5% of sales Supplies expense 2% of sales Utilities (fixed) $1,400 Depreciation on equipment (fixed) (a) $750 Rent (fixed) $3,600 Miscellaneous (fixed) $900 (a) The capital expenditures budget indicated that the company will spend $300,000 on April 1 for equipment. The fixtures are expected to have a $30,000 salvage value and a ten-year (120-month) useful life. 6. Prepare a cash payments budget for selling and administrative expenses. Utilities and sales commissions are paid in the month after the month in which they are incurred; all other expenses are paid in the month they are incurred. 7. Prepare a cash budget. The company borrows and repays principal in increments of $1,000 on the last day of the month as needed. It pays interest of 1% per month in cash on the last day of the month. Company policy is to maintain an ending cash balance of at least $12,000. 8. Prepare a pro forma income statement for the quarter. 9. Prepare a pro forma balance sheet at the end of the quarter. 10. BONUS POINTS (10). Prepare a pro forma statement of cash flows for the quarter.

Name: cascade corporations president has asked you to prepare a master budget for the first three months april may and june of year 2004 based on the following information 1 prepare a sales budget 36187
Uploaded: 2023-07-19T17:47:48-08:00
Duration: 5 min 52 s
Channel: Akash M
Description: cascade corporations president has asked you to prepare a master budget for the first three months april may and june of year 2004 based on the following information 1 prepare a sales budget 36187

Cascade Corporation's president has asked you to prepare a master budget for the first
three months (April, May, and June) of Year 2004, based on the following information:
1. Prepare a Sales Budget. April sales are estimated to be $400,000, of which
$300,000 will be cash sales and $300,000 will be on credit. The company expects to grow
10% per month in sales.
2. Prepare a schedule of cash receipts. The company expects to collect 100% of
the accounts receivable generated by credit sales in the month following the sale.
3. Prepare an inventory purchases budget. The cost of goods sold is 60% of sales.
The company policy is to budget an ending inventory balance equal to 25% of the next
month's projected cost of goods sold. Assume the company expects July cost of goods
sold to be $314,000. Assume that all purchases are made on account.
4. Prepare a cash payments budget for inventory purchases. The company pays
70% of accounts payable in the month of purchase and the remaining 30% in the
following month.
5. Prepare a selling and administrative expenses budget. Use the following
information to prepare the budget:
Salary expense (fixed) $24,000
Sales commissions 5% of sales
Supplies expense 2% of sales
Utilities (fixed) $1,400
Depreciation on equipment (fixed) (a) $750
Rent (fixed) $3,600
Miscellaneous (fixed) $900
(a) The capital expenditures budget indicated that the company will spend $300,000 on
April 1 for equipment. The fixtures are expected to have a $30,000 salvage value and a
ten-year (120-month) useful life.
6. Prepare a cash payments budget for selling and administrative expenses. Utilities and sales commissions are paid in the
month after the month in which they are incurred; all other expenses are paid in the month they are incurred.
7. Prepare a cash budget. The company borrows and repays principal in increments of $1,000 on the last day of the month as
needed. It pays interest of 1% per month in cash on the last day of the month. Company policy is to maintain an ending cash
balance of at least $12,000.
8. Prepare a pro forma income statement for the quarter.
9. Prepare a pro forma balance sheet at the end of the quarter.
10. BONUS POINTS (10). Prepare a pro forma statement of cash flows for the quarter.

Added by Tracey W.

Horngren’s Cost Accounting

Srikant M. Datar, Madhav V. Rajan 16th Edition

Instant Answer

Solved by Expert Akash M

07/19/2023

Step 1

Sales Budget** First, we need to calculate the sales for April, May, and June. We are given that April sales are $400,000 and sales grow by 10% each month. * **April Sales:** $400,000 * **May Sales:** $400,000 * (1 + 0.10) = $400,000 * 1.10 = $440,000 * Show more…

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Cascade Corporation's president has asked you to prepare a master budget for the first three months (April, May, and June) of Year 2004, based on the following information: 1. Prepare a Sales Budget. April sales are estimated to be $400,000, of which $300,000 will be cash sales and $300,000 will be on credit. The company expects to grow 10% per month in sales. 2. Prepare a schedule of cash receipts. The company expects to collect 100% of the accounts receivable generated by credit sales in the month following the sale. 3. Prepare an inventory purchases budget. The cost of goods sold is 60% of sales. The company policy is to budget an ending inventory balance equal to 25% of the next month's projected cost of goods sold. Assume the company expects July cost of goods sold to be $314,000. Assume that all purchases are made on account. 4. Prepare a cash payments budget for inventory purchases. The company pays 70% of accounts payable in the month of purchase and the remaining 30% in the following month. 5. Prepare a selling and administrative expenses budget. Use the following information to prepare the budget: Salary expense (fixed) $24,000 Sales commissions 5% of sales Supplies expense 2% of sales Utilities (fixed) $1,400 Depreciation on equipment (fixed) (a) $750 Rent (fixed) $3,600 Miscellaneous (fixed) $900 (a) The capital expenditures budget indicated that the company will spend $300,000 on April 1 for equipment. The fixtures are expected to have a $30,000 salvage value and a ten-year (120-month) useful life. 6. Prepare a cash payments budget for selling and administrative expenses. Utilities and sales commissions are paid in the month after the month in which they are incurred; all other expenses are paid in the month they are incurred. 7. Prepare a cash budget. The company borrows and repays principal in increments of $1,000 on the last day of the month as needed. It pays interest of 1% per month in cash on the last day of the month. Company policy is to maintain an ending cash balance of at least $12,000. 8. Prepare a pro forma income statement for the quarter. 9. Prepare a pro forma balance sheet at the end of the quarter. 10. BONUS POINTS (10). Prepare a pro forma statement of cash flows for the quarter.