The following actual balance sheet was prepared for Martins Musical Supplies Ltd as at 30 September 2017.
Question:
The following actual balance sheet was prepared for Martin’s Musical Supplies Ltd as at 30 September 2017.
Martin’s musIcal supplies Ltd Balance Sheet as at 30 September 2017 | |||||||||
Cash at bank Accounts receivable (net) Inventory Prepaid rent Furniture & equipment Accumulated depreciation Plant & machinery Accumulated depreciation | $ 11000 20000 32000 1600 40000 (20000) 64000 (48000) | Accounts payable Accrued wages Bank loan Share capital Retained earnings | $ 12000 1600 34000 40000 13000 | ||||||
$100600 | $100600 | ||||||||
At 30 September, you are also provided with the following information:
1. Sales forecasts available: October $39000, November $44000, December $48000.
2. Cash sales account for 40% of sales. Credit sales are collected 30% in the month of sale, 50% in the following month and 20% in the second month following the sale.
3. Purchases are expected to be made at the rate of 60% of expected sales for each month and are purchased on credit.
4. Creditors are paid 40% in the month of purchase and 60% in the next month.
5. Inventory is projected to be $37600 at 31 December 2017.
6. Rent on premises increased to $4950 per quarter from 1 August 2017. This is paid on the last day of the first month of each quarter.
7. Wages of $12000 per month are normally paid as incurred, although December wages of $2000 are expected be outstanding at 31 December 2017 as a result of the normal payday being a week after the end of the year.
8. The following are paid as incurred: electricity $600 per month, interest on loan $220 per month and cleaning contractor $400 per month. The loan principal is paid at the rate of $2000 per quarter.
9. Depreciation is charged at 10% per annum on the cost of the furniture and equipment and 15% per annum on the cost of the plant and machinery.
10. A new machine will be purchased for cash on 31 December 2017 for $16000.
Required
A. Prepare a budgeted income statement for the quarter ended 31 December 2017.
B. Prepare a cash budget for the quarter ended 31 December 2017.
C. Prepare a budgeted balance sheet as at 31 December 2017.
Balance SheetBalance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Cash Budget
A cash budget is an estimation of the cash flows for a business over a specific period of time. These cash inflows and outflows include revenues collected, expenses paid, and loans receipts and payment. Its primary purpose is to provide the...
Step by Step Answer:
Accounting
ISBN: 978-1118608227
9th edition
Authors: Lew Edwards, John Medlin, Keryn Chalmers, Andreas Hellmann, Claire Beattie, Jodie Maxfield, John Hoggett