Cash 70,000 Sales Budget: Accounts Receivable 540,000 20x0 20x1 Marketable SecuriTes 30,000 December January Feb March 1st Quarter Inventory 308,000 ±otal Sales 800,000 Buildings and equipment (net of accumulated depreciaTon) 1,252,000 Cash Sales* 200000 ±otal Assets 2,200,000 Sales on Accounts+ 600000 Accounts Payable 352,800 *25% of total sales +75% of total sales Bond Interest Payable 25,000 Property ±axes Payable 7,200 Cash Receipts Budget: Bonds Payable (10%; due in 20x6) 600,000 20X1 Common Stock 1,000,000 January Feb March 1st Quarter Retained Earnings 215,000 Cash Sales ±otal LiabiliTes and Stockholders' Equity 2,200,000 Cash CollecTons from credit sales during current month* Cash CollecTons from credit sales during preceding month+ Sales Salaries 42,000 ±otal Cash Receipts AdverTsing and PromoTon 32,000 *10% of current month's credit sales +90% of previous month's credit sales AdministraTve Salaries 42,000 DepreciaTon 50,000 Purchases Budget: Interest on Bonds 5,000 20x0 20x1 Property ±axes 1800 December January Feb March 1st Quarter sales commissions run at the rate of 1% of sales Budgeted costs of goods sold Add: Desired ending inventory 1. Sales on account, ²rst quarter: $2,184,6000 ±otal goods needed 3. Purchases: ²rst quarter: $2,103,640 Less: Expected Beginning Inventory 5. Cash receipts, ²rst quarter: $2,734,060 Purchases 7. Net income: $231,312 *Since April's expected sales and cost of goods sold are the same as the projecTons for march, the desired ending inv **±he beginning inventory for the quarter is equal to the December ending inventory Cash Disbursements Budget: 20x1 January Feb March 1st Quarter Inventory Purchases: Cash Payments of Purchases During the current month* Cash payments for purchases during the preceding month+ ±otal cash payments for inventory purchases other expenses: sales salaries adverTsing and promoTon administraTve salaraies interest on bonds ++ property taxes ++ sales commissions total cash pyaments for other expenses ±otal cash disbursements *40% of current month's purchases [see requirement (3)] **Bond interest is paid every six months, on January 31 and July 31.Property taxes also are paid every six months, on Summary cash budget: 20x1 January Feb March 1st Quarter Cash receipts (from schedule 2) Less: cash disbursements (from schedule 4) Change in cash balance during period due to operaTons Sale of marketable securiTes (1/2/x1) Proceeds from bank loan (1/2/x1) Purchase of equipment Repyament of bank loan (3/31/x1) Interest on bank loan Payment of dividends Change in cash balance during ²rst quarter Cash balance 1/1/x1 Cash balance 3/31/x1 *$200,000 X 10% per year X 1/4 year = %5,000 . + the desired ending inventory for the quarter is equal to the desiredending inventory on March 31, 20x1 . ++ 50% x $560,000 (where $560,000 = December cost of goods sold = December sales of $800,000 x 70% . +60% of the prior month's purchases [see requirement (3)]
