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Planning And Budgeting

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Master Budget - Victoria Kite Company

Schedule a: Sales budget

October $38,000 December $25,000 February $75,000 April $45,000

November 25,000 January 62,000 March 38,000

Schedule b: Cash Collections Budget

January February March Total

Cash sales $6,200 $22,500 $22,800 $51,500

Collections from prior month 25,000 62,000 75,000 139,500

Total collections $31,200 $84,500 $97,800 $213,500

Schedule c: Purchases Budget

January February March Total

Desired ending inventory $8,050 $6,000 $6,000 $20,050

Plus cost of goods sold 31,000 37,500 19,000 87,500

Total need $39050 $43,500 $25,000 $107,550

Less beginning inventory 39,050 8,050 6,000 53,100

Total purchases $0 $12,300 $19,000 $54,450

Schedule d: Disbursements for purchases

January February March Total

For December $35,000 $35,000

For January − − $0

For February 35,450 $35,450 68,900

For March 19,000 19,000

Total disbursements $35,000 $34,450 $54,450 $122,900

Schedule e and f: Statement of Cash Receipts

January February March Total

Cash Expenses

Salaries and Wages 15,000 15,000 15,000 45,000

Units 7,750 9,375 4,750 21,875

Rent 5,750 5,750 5,750 17,250

Fixtures $3,000

Other 2,500 2,500 2,500 7,500

Total disbursements for expenses $31,000 $32,625 $31,000 $94,625

Noncash expenses:

Depreciation 250 250 250 750

Net Operating Income $30,750 $32,375 $30,750 $93,875

Budgeted Income Statement:

January February March January - March Total

Sales $62,000 $75,000 $38,000 $175,000

Cost if goods sold 31,000 37,500 19,000 87,500

Gross Margin 31,000 37,500 19,000 87,500

Operating Expenses

Salaries and Wages 15,000 15,000 15,000 45,000

Units 7,750 9,375 4,750 21,875

Rent 5,750 5,750 5,750 17,250

Insurance 125 125 125 375

Other 2,500 2,500 2,500 7,500

Interest 129 129 − 258

Depreciation 250 250 250 750

Total Operating Expense $54,754 $61,254 $42,625 $158,633

Net Operating Income $7,246 $13,746 $4,625 $25,617

Budgeted Balance Sheet:

Assets January February March

Current assets

Cash 5,100 37,692 32,992

Accounts receivable 27,300 36,200 2,700

Inventory 8,050 6,000 6,000

Unexpired insurance 1,375 1,250 1,125

Fixed assets 12,250 12,000 11,750

Total current assets 54,075 93,142 77,567

Liabilities and Equities

Liabilities

Accounts payable − 35,450 19,000

Dividends payable − − 1,500

Retained earnings 5,500 − −

Rent payable − 11,000 16,500

Borrowed money 15,500 − −

Total liabilities 21,000 46,450 37,500

Equities

Equity 25,700 25,700 25,700

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