DIMSDALE SPORTS COMPANY Balance Sheet December 31 Assets Cash $ 22,000 Accounts receivable 520,000 Inventory 95,000 Equipment $ 600,000 Less: Accumulated depreciation 75,000 525,000 Total assets $ 1,162,000 Liabilities and Equity Liabilities Accounts payable $ 355,000 Loan payable 12,000 Taxes payable (due March 15) 89,000 456,000 Equity Common stock $ 474,000 Retained earnings 232,000 706,000 Total liabilities and equity $ 1,162,000 To prepare a master budget for January, February, and March, use the following information. a. The company’s single product is purchased for $20 per unit and resold for $56 per unit. The inventory level of 4,750 units on December 31 is more than management’s desired level, which is 20% of the next month’s budgeted sales units. Budgeted sales are January, 7,000 units; February, 8,500 units; March, 11,500 units; and April, 10,500 units. All sales are on credit. b. Cash receipts from sales are budgeted as follows: January, $242,600; February, $710,672; March, $504,644. c. Cash payments for merchandise purchases are budgeted as follows: January, $65,000; February, $305,800; March, $99,600. d. Sales commissions equal to 20% of sales dollars are paid each month. Sales salaries (excluding commissions) are $5,500 per month. e. General and administrative salaries are $12,000 per month. Maintenance expense equals $1,900 per month and is paid in cash. f. New equipment purchases are budgeted as follows: January, $36,000; February, $93,600; and March, $26,400. Budgeted depreciation expense is January, $ 6,625; February, $7,600; and March, $7,875. g. The company budgets a land purchase at the end of March at a cost of $175,000, which will be paid with cash on the last day of the month. h. The company has an agreement with its bank to obtain additional loans as needed. The interest rate is 1% per month and interest is paid at each month-end based on the beginning-month balance. Partial or full payments on these loans are made on the last day of
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Sales Budgets: - January: 7,000 units x $56 = $392,000 - February: 8,500 units x $56 = $476,000 - March: 11,500 units x $56 = $644,000 Show more…
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Cash budgeting, budgeted balance sheet (Continuation of 6 -42) (Appendix) Refer to the information in Problem $6-42$ Budgeted balances at January 31,2018 are as follows: Customer invoices are payable within 30 days. From past experience, Skulas's accountant projects $40 \%$ of invoices will be collected in the month invoiced, and $60 \%$ will be collected in the following month. Accounts payable relates only to the purchase of direct materials. Direct materials are purchased on credit with $50 \%$ of direct materials purchases paid during the month of the purchase, and $50 \%$ paid in the month following purchase. Fixed manufacturing overhead costs include $ 64,000$ of depreciation costs and fixed nonmanufacturing overhead costs include $ 10,000$ of depreciation costs. Direct manufacturing labor and the remaining manufacturing and nonmanufacturing overhead costs are paid monthly. All property, plant, and equipment acquired during January 2018 were purchased on credit and did not entail any outflow of cash. There were no borrowings or repayments with respect to long-term liabilities in January 2018 On December $15,2017,$ Skulas's board of directors voted to pay a $ 160,000$ dividend to stockholders on January 31,2018 1. Prepare a cash budget for January $2018 .$ Show supporting schedules for the calculation of collection of receivables and payments of accounts payable, and for disbursements for fixed manufacturing and nonmanufacturing overhead. 2. Skulas is interested in maintaining a minimum cash balance of $ 120,000$ at the end of each month. Will Skulas be in a position to pay the $ 160,000$ dividend on January $31 ?$ 3. Why do Skulas's managers prepare a cash budget in addition to the revenue, expenses, and operating income budget? 4. Prepare a budgeted balance sheet for January 31,2018 by calculating the January 31,2018 balances in (a) cash (b) accounts receivable (c) inventory (d) accounts payable and (e) plugging in the balance for stockholders' equity.
Earna Wheeler is able to make a down payment of $4000 on a two-door sedan she purchases for $23,457, including tax. In order to finance the remaining portion, she takes out a three-year car loan at a fixed interest rate of 8.5%. (Module 5, Lesson 1) a) Calculate her monthly payment for the two-door sedan. (3 marks) b) Calculate her deferred payment for the two-door sedan. (1 marks) c) Calculate her finance charge for the automobile.
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