Martin & Sons is a small wholesale distributor of consumer goods. The company generates a gross margin
Question:
June (actual).................................$45,000
July............................................$52,000
August .......................................$56,000
September...................................$60,000
October......................................$48,000
The company plans for each month's ending inventory to be 28% of the following month's budgeted cost of goods sold. Half of a month's inventory purchases are paid for in the month of purchase; the other half are paid for in the month following purchase. The accounts payable on June 30 are the result of June purchases of inventory. All monthly expenses were paid monthly. Monthly expenses included: commissions, $9,000; rent, $1,200; other expenses (excluding depreciation), 5% of sales. Depreciation is $1,300 for the quarter and includes depreciation on new assets acquired during the quarter. The assets acquired for cash during the quarter included equipment of $2,100 in July and $3,000 in August. The company wishes to maintain a minimum cash balance of $3,000 at the end of each month. The company has a financing facility that allows the company to borrow in increments of $1,000 at the beginning of each month from a local bank, up to a total loan balance of $30,000. The interest rate on these loans is 1.5% per month, and interest is not compounded. The company, when able, repays the loan plus accumulated interest at the end of the quarter.
Additional information:
Current assets as of June 30:
Cash....................................................................$4,000
Accounts receivable................................................$29,250
Inventory..............................................................$7,100
Buildings and equipment, net....................................$102,550
Accounts payable...................................................$22,400
Capital stock.........................................................$99,000
Retained earnings................................................$22,499.80
Required:
Using the data above, for quarter ending September 2014, prepare the following:
a. The schedule of the expected cash collections
b. The merchandise purchases budget:
c. The schedule of expected cash disbursements - merchandise purchases.
Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =... Accounts Payable
Accounts payable (AP) are bills to be paid as part of the normal course of business.This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive... Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...
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Related Book For
Managerial Accounting
ISBN: 9780073526706
12th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
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