A small business owner, Bram, intends to introduce a budget as an economic instrument. Bram intends to

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Question:

A small business owner, Bram, intends to introduce a budget as an economic instrument. Bram intends to initially only establish the three main budgets, ie. profit budget, liquidity budget and balance budget. Bram is, unfortunately, uncertain about both content and calculations in the respective main budget. Your task is to help Bram, who picks out different documents for you, to answer the following sub-questions. Note that each sub-question is resolved separately from the others, as either new data is added or previous data is changed during the budget process. All starting points for budgeting are accounting principles, as the owner wishes to be able to set the budgeted against booked in the accounts at the end of the financial year. For amounts, or for values, enter your answer in thousands of kronor, SEK thousand, do not put out plus or minus signs and have no space or point for thousands. Each correct answer gives 2 points.

a) At the beginning of the financial year, a new machine must be purchased for SEK 300,000. At the beginning of the financial year, there are machines with a book value of SEK 2,700,000. Their total acquisition value amounted to SEK 4,200,000. No machine is fully depreciated. For all machines, the useful life is 3 years and with linear depreciation. Answer the following: Budgeted depreciation, based on this basis, in the income budget amounts to SEK.

b) Bram has long-term, interest-bearing liabilities, where amortization and payment of interest takes place once a year, on 1 November. At the beginning of the financial year, the balance sheet item "Accrued interest expense" amounts to SEK 5,000,000. At the end of the financial year, it amounts to SEK 4,000,000. Bram estimates that the budgeted interest cost in the income budget to SEK 20 000. Answer the following: The budgeted interest payment, based on this basis, in the liquidity budget amounts to SEK.

c) Bram has calculated the budgeted gross salary in the income budget to SEK 525 000. The total personnel tax is estimated to amount to SEK 165 000. Answer the following: The payment of the staff's net salaries, based on this basis, in the liquidity budget is budgeted to amount to SEK.

d) As regards loan liabilities, total long-term liabilities amount to SEK 900 000 at the beginning of the financial year. During the year, repayments will be made with a total of SEK 80 000 and interest will be paid with a total of SEK 20 000. Bram also intends to raise a new long-term loan of SEK 120 000. Answer the following: Total long-term liabilities, based on this basis, in the balance sheet budget are budgeted at SEK.

e) After Bram has thought further about a couple of items in the balance sheet budget, Bram shows you the following: Inventories: IB at the beginning of the financial year: SEK 350 000. UB at the end of the budget year: SEK 400 000. Accounts payable: IB at the beginning of the financial year: SEK 200 000. UB at the end of the budget year: SEK 225 000. Bram has also made an estimate of budgeted payments to suppliers, to SEK 450 000. Answer the following: Budgeted expenses for the purchase of goods, under this basis, amount to SEK. Answer the following: Budgeted cost for goods sold, KSV, based on this basis, in the profit budget is budgeted at SEK.

f) Accounts receivable at the beginning of the financial year are SEK 175 000. The corresponding balance sheet item at the end of the financial year is SEK 200,000. Budgeted payments from customers in the liquidity budget are estimated at SEK 600 000. Answer the following: Budgeted sales revenue, based on this data, is budgeted to amount to SEK.

g) To determine the average credit period with suppliers, Bram has the following documentation (assume that the year has 360 days): • Budgeted payments to suppliers: SEK 425 000. • Cost of goods sold, KSV, for the financial year: SEK 475 000. • Budgeted expenses for purchases of goods from suppliers: SEK 450,000. Closing accounts payable at the end of the financial year are estimated at SEK 50 000. Answer the following: The average credit period of suppliers, based on this data, amounts to (round to full days) full days.

h) To determine average accounts receivable at the end of the financial year, Bram has the following basis (assume that the year has 360 days and that the credit period is 20 days). • Budgeted income from sales to customers: SEK 650 000. • Sales revenue for the financial year: SEK 675 000. • Budgeted payments from customers: SEK 625 000. Answer the following: Average accounts receivable, according to this data, at the end of the budget year amounts to (round off, where applicable, to entire kronor, ie no pennies) SEK.