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Master Budget Worksheets - Merchandiser - 22-5B

The document provides information to prepare a master budget for Wild Wood Company for April, May and June 2011. Key elements include: - Sales are budgeted to increase 5% monthly and commissions are 12.5% of sales - Inventory is kept at 80% of next month's sales and purchases are on credit paid next month - Expenses include salaries, depreciation, interest and dividends will be paid in May - The minimum cash balance is $50,000 and equipment will be purchased in June

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528 views7 pages

Master Budget Worksheets - Merchandiser - 22-5B

The document provides information to prepare a master budget for Wild Wood Company for April, May and June 2011. Key elements include: - Sales are budgeted to increase 5% monthly and commissions are 12.5% of sales - Inventory is kept at 80% of next month's sales and purchases are on credit paid next month - Expenses include salaries, depreciation, interest and dividends will be paid in May - The minimum cash balance is $50,000 and equipment will be purchased in June

Uploaded by

Firaol Neme
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Accounting Principles II

Master Budget Project

Wild Wood Company's management asks you to prepare its master budget using the following information.
The budget is to cover the months of April, May, and June of 2011.

Wild Wood Company


Balance Sheet
March 31, 2011

Assets Liabilities and Equity


Cash 50,000 Accounts payable 156,000
Accounts receivable 175,000 Short-term notes payable 12,000
Inventory 126,000 Total current liabilities 168,000
Total current assets 351,000 Long-term note payable 200,000
Equipment, gross 480,000 Total liabilities 368,000
Accumulated depreciation (90,000) Common stock 235,000
Equipment, net 390,000 Retained earnings 138,000
Total stockholders' equity 373,000
Total assets 741,000 Total liabilities and equity 741,000

Additional Information:
1) Sales for March total 10,000 units. Each month's sales are expected to exceed the prior month's
results by 5%. The product's selling price is $25 per unit.

2) Company policy calls for a given month's ending inventory to equal 80% of the next month's
expected unit sales. The March 31 inventory is 8,400 units, which complies with the policy.
The purchase price is $15 per unit.

3) Sales representatives' commissions are 12.5% of sales and are paid in the month of the sales. The
sales manager's monthly salary will be $3,500 in April and $4,000 per month thereafter.

4) Monthly general and administrative expenses include $8,000 administrative salaries, $5,000
depreciation, and 0.9% monthly interest on the long-term note payable.

5) The company expects 30% of sales to be for cash and the remaining 70% on credit. Receivables
are collected in full in the month following the sale (none is collected in the month of the sale).

6) All merchandise purchases are on credit, and no payables arise from any other transactions. One
month's purchases are fully paid in the next month.

7) The minimum ending cash balance for all months is $50,000. If necessary, the company borrows
enough cash using a short-term note to reach the minimum. Short-term notes require an interest
payment of 1% at each month-end (before any repayment). If the ending cash balance exceeds
the minimum, the excess will be applied to repaying the short-term notes payable balance.

8) Dividends of $100,000 are to be declared and paid in May.


9) No cash payments for income taxes are to be made during the second calendar quarter. Income
taxes will be assessed at 35% in the quarter

10) Equipment purchases of $55,000 are scheduled for June.

REQUIRED
1) Prepare sales budget, including budgeted sales for July
2) Prepare purchases budget, the budgeted cost of goods sold for each month and quarter, and the
cost of the June 30 budgeted inventory
3) Prepare the operating expense budget
4) Prepare the budgeted Income Statement
5) Prepare expected cash receipts from customers and the expected June 30 balance of accounts
receivable
6) Prepare expected cash payments for purchases and the expected June 30 balance of accounts
payable
7) Prepare budgeted cash payments for operating expenses
8) Prepare the cash budget
9) Prepare the budgeted Balance Sheet
10) Prepare the budgeted Statement of Cash Flows
Problem 22-5B
Sales Budget

January February March Total


Budgeted Units
Budgeted Unit Sales Price
Budgeted Sales in Dollars
Total

Merchandise Purchases Budget


January February March Total
Next Period's unit sales
Ratio of inventory to future sales
Budgeted ending inventory
Add Budgeted sales
Required available merchandise
Less Beginning Inventory
Units to be purchased
Budgeted Cost Per Unit
Budgeted merchandise purchases

Selling Expense Budget


January February March Total
Budgeted Sales
Sales commission percent
Sales Commissions Expense
Sales Salaries
Total Selling Expenses

General and Administrative Expense Budget


January February March Total
Salaries
Maintenance
Depreciation
Total Expenses

Depreciation Expense Calculations January February March Total


Capital Expenditures Budget
January February March Total
Equipment Purchases
Land Purchase
Total

Budgeted Cash Collections from Customers


January February March Total
Total Sales
Cash Sales
Credit Sales
Cash Collections
Receivables
Month after sale
Second Month
Total from Credit customers
Cash Sales
Total Cash Received

Budgeted Cash Payments for Purchases


January February March Total
Credit Purchases
Accounts Payable
Month after purchase (20%)
Second month (80%)
Total paid for purchases
Cash Budget
January February March
Beginning Cash Balance
Cash Receipts from Customers
Total Cash Available
Cash Disbursements:
Payments for Purchases
Sales Commissions
Sales Salaries
General & Administrative Salaries
Maintenance Expense
Interest
Taxes Payable
Purchase of Equipment
Purchase of land
Total Cash Disbursements
Preliminary Balance
Repayment of loan to bank
Ending Cash Balance
Loan balance, end of month
Isle Corporation
Budgeted Income Statement
For the Quarter ended March 31, 2014

Budgeted Balance Sheet


Isle Corporation
Budgeted Balance Sheet
31-Mar-14
Assets
Cash Cash budget
Accounts receivable Note 1
Inventory Note 2
Total Current Assets
Land Capital budget
Equipment Note 3
Less accumulated depreciation Note 4
Total Assets

Liabilities and Equity


Accounts payable Note 5
Bank loan payable Cash Budget
Taxes payable Income Statement
Total liabilities
Common stock
Retained earnings Note 6
Total stockholders' equity
Total liabilities and equity
Budgeted Statement of Cash Flows
Isle Corporation
Budgeted Statement of Cash Flows
For the Quarter ended March 31, 2013

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