SECTION 1 PREPARATION OF A BUDGETED INCOME STATEMENT Cold Mountain Ice Cream Shoppe is an ice...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
SECTION 1 PREPARATION OF A BUDGETED INCOME STATEMENT Cold Mountain Ice Cream Shoppe is an ice cream shop company that sells a franchised brand of single serve ice cream. Sales Budget: The sales department of Cold Mountain Ice Cream Shoppe has determined that sales for 2020 will be 8% higher than sales in 2019. Actual 2019 sales and 2019 Q4 projections are as follows: 15,000 units/month 20,000 units/month Jan - Mar April - May June-August 47,000 units/month Sept-Oct 25,000 units/month 15,000 units/month Nov-Dec The average selling price for 2019 was $5.00/unit. The company expects to increase the selling price in 2020 by 5%. Cost of Goods Sold: Each unit of ice cream costs 60% of the retail price. Selling and Administrative Expenses: Cold Mountain has to pay a franchise fee equal to 4% of sales revenue Salaries are $6,000/month During peak season (June-August) Cold Mountain hires additional sales people. The additional sales people's salaries are $2,500/month During peak season (June-August) Cold Mountain advertises. Advertising expenses are $10,000 per month Rent Expense is fixed at $2,500 per month Utilities are $500 during the off season (Jan - May, Sept- Dec) and $750 per month during peak season (June- August) Supplies are $500/month Depreciation on the store equipment is $250/month Income taxes Cold Mountain pays income taxes at a rate of 30% of income before taxes Required: Using an Excel spreadsheet, prepare a Budgeted Income Statement by month for Cold Mountain Ice Cream Shoppe SECTION 2 PREPARATION OF A MERCHANDISE PURCHASE AND CASH BUDGET A. MERCHANDISE PURCHASE BUDGET Budgeted Ending Inventory +Budgeted Units Sold -Budgeted Beginning Inventory Inventory (units) to be purchased - Projected beginning inventory on hand on January 1, 2020 is 15,000 units. - Cold Mountain maintains an ending inventory equal to 75% of the next month's budgeted sales. - Cold Mountain estimates January 2021 sales to be the same as December 2020 Sales Required: Using and Excel spreadsheet prepare a Merchandise Purchase Budget by month for Cold Mountain Ice Cream Shoppe B. CASH BUDGET Beginning Cash Balance +Budgeted Cash Receipts -Budgeted Cash Disbursements -Budgeted Ending Cash Balance Projected beginning cash balance on January 1, 2020 is B. CASH BUDGET Beginning Cash Balance +Budgeted Cash Receipts -Budgeted Cash Disbursements -Budgeted Ending Cash Balance Projected beginning cash balance on January 1, 2020 is $180,000 Assume 80% of sales are paid for in cash and 20% are paid with Cold Mountain credit cards. Credit cards are paid the following month. Projected beginning accounts receivable balance on January 2020 is $20,000. Cold Mountain purchases its inventory entirely on account. Full payment is made the month following the purchase. Projected accounts payable balance as of January 1, 2020 is $45,000. Franchise fees are paid the month following the sales (for example franchise fees for January are paid in February) Franchise fee expense for December 2019 was $3,750. Salaries, Rent, Utilities and Supplies expense are paid for during the month in which they are incurred. Advertising expense is paid for in advance the month prior to the advertising campaign. Taxes are paid the following year (in April) Prior year taxes were $120,000. Required: Using and Excel spreadsheet prepare a cash budget by month for Cold Mountain Ice Cream Shoppe. SECTION 1 PREPARATION OF A BUDGETED INCOME STATEMENT Cold Mountain Ice Cream Shoppe is an ice cream shop company that sells a franchised brand of single serve ice cream. Sales Budget: The sales department of Cold Mountain Ice Cream Shoppe has determined that sales for 2020 will be 8% higher than sales in 2019. Actual 2019 sales and 2019 Q4 projections are as follows: 15,000 units/month 20,000 units/month Jan - Mar April - May June-August 47,000 units/month Sept-Oct 25,000 units/month 15,000 units/month Nov-Dec The average selling price for 2019 was $5.00/unit. The company expects to increase the selling price in 2020 by 5%. Cost of Goods Sold: Each unit of ice cream costs 60% of the retail price. Selling and Administrative Expenses: Cold Mountain has to pay a franchise fee equal to 4% of sales revenue Salaries are $6,000/month During peak season (June-August) Cold Mountain hires additional sales people. The additional sales people's salaries are $2,500/month During peak season (June-August) Cold Mountain advertises. Advertising expenses are $10,000 per month Rent Expense is fixed at $2,500 per month Utilities are $500 during the off season (Jan - May, Sept- Dec) and $750 per month during peak season (June- August) Supplies are $500/month Depreciation on the store equipment is $250/month Income taxes Cold Mountain pays income taxes at a rate of 30% of income before taxes Required: Using an Excel spreadsheet, prepare a Budgeted Income Statement by month for Cold Mountain Ice Cream Shoppe SECTION 2 PREPARATION OF A MERCHANDISE PURCHASE AND CASH BUDGET A. MERCHANDISE PURCHASE BUDGET Budgeted Ending Inventory +Budgeted Units Sold -Budgeted Beginning Inventory Inventory (units) to be purchased - Projected beginning inventory on hand on January 1, 2020 is 15,000 units. - Cold Mountain maintains an ending inventory equal to 75% of the next month's budgeted sales. - Cold Mountain estimates January 2021 sales to be the same as December 2020 Sales Required: Using and Excel spreadsheet prepare a Merchandise Purchase Budget by month for Cold Mountain Ice Cream Shoppe B. CASH BUDGET Beginning Cash Balance +Budgeted Cash Receipts -Budgeted Cash Disbursements -Budgeted Ending Cash Balance Projected beginning cash balance on January 1, 2020 is B. CASH BUDGET Beginning Cash Balance +Budgeted Cash Receipts -Budgeted Cash Disbursements -Budgeted Ending Cash Balance Projected beginning cash balance on January 1, 2020 is $180,000 Assume 80% of sales are paid for in cash and 20% are paid with Cold Mountain credit cards. Credit cards are paid the following month. Projected beginning accounts receivable balance on January 2020 is $20,000. Cold Mountain purchases its inventory entirely on account. Full payment is made the month following the purchase. Projected accounts payable balance as of January 1, 2020 is $45,000. Franchise fees are paid the month following the sales (for example franchise fees for January are paid in February) Franchise fee expense for December 2019 was $3,750. Salaries, Rent, Utilities and Supplies expense are paid for during the month in which they are incurred. Advertising expense is paid for in advance the month prior to the advertising campaign. Taxes are paid the following year (in April) Prior year taxes were $120,000. Required: Using and Excel spreadsheet prepare a cash budget by month for Cold Mountain Ice Cream Shoppe.
Expert Answer:
Related Book For
Posted Date:
Students also viewed these accounting questions
-
A Head Office in Calcutta has a branch in Burdwan. All purchases are made by the Head Office and goods sent to the branch are invoiced at cost plus 25 per cent. All cash received by the branch is...
-
master budget case camdrone as part of the continued advancement of technology, a drone camera market has emerged in recent years the drone camera market has been growing as more photography...
-
Identify and explain five challenges faced by monetary policy makers.
-
What type of epithelial tissue is found in the walls of the urinary bladder to provide it with the ability to distend? a. Simple cuboidal epithelium b. Transitional epithelium c. Pseudostratified...
-
Ries, Bax, and Thomas invested $80,000, $112,000, and $128,000, respectively, in a partnership. During its first calendar year, the firm earned $249,000. Required Prepare the entry to close the firms...
-
In the months leading up to the 2016 election, Christopher Steele, a former British intelligence agent, was hired by a Washington, D.C., research firm to investigate whether then-candidate Donald...
-
Patel, CPA, has completed the audit of the financial statements of Bellamy Corporation as of and for the year ended December 31, 2011. Patel also audited and reported on the Bellamy financial...
-
Company EJ plans to build a new plant to manufacture bicycles. EJ sells its bicycles in the world market for $400 per bike. It could locate the plant in Province P, which levies a 20 percent tax on...
-
Which assessment allows a trainer to understand a client's lean body and total fat mass? Body fat calculation Girth measurements Scale weight Photographs
-
What are the primary differences between direct and indirect costs? Please give an example of each. What is the differences between fixed costs and variable costs? Please give an example of each....
-
You own a 10 year, 8% annual coupon bond, issued on 1 January 2010, which has a par value of R1 000. You receive coupons each year on 31 December. You have decided to sell your bond on 31 March 2018....
-
The United Shipping Co. borrowed $25,000 at 12% interest on March 1, 2015. The note is to be repaid, with interest, in six months. If United Shipping makes monthly adjusting entries, which of the...
-
A vertical force of 8 8 N down ward is applied to a pink panther with a mass of 4 . 0 kg. Calculate the net force on it .
-
Suppose BNP Paribas agrees to act as lender in a repurchase agreement with AQR Capital Management in which AQR plans to sell $800,000 of Illinois state bonds to BNP Paribas and buy them back 28-days...
-
A 2 cm tall object is placed perpendicular to the principal axis of a convex lens of focal length 10 cm. The distance of the object from the lens is 15 cm. Find the position and magnification of the...
-
Banner Company acquires an 80% interest in Roller Company for $640,000 cash on January 1, 2013. The NCI has a fair value of $160,000. Any excess of cost over book value is attributed to goodwill. To...
-
Leisure Industries manufactures custom- designed playground equipment for schools and city parks. Leisure expected to incur $ 828,000 of manufacturing overhead cost, 41,400 of direct labor hours, and...
-
Owner Kay Fay is considering franchising her Noodles Galore restaurant concept. She believes people will pay $ 6.25 for a large bowl of noodles. Variable costs are $ 2.50 a bowl. Fay estimates...
-
For each of the situations listed, identify the primary standard from the IMA Statement of Ethical Professional Practice that is violated (competence, confidentiality, integrity, or credibility). 1....
-
KK Pty Ltd is a small manufacturing business. For the year ending 30 June 2019, the company achieved sales of $2 772 000 and a gross profit margin of 30%. Although satisfied with this result,...
-
The following actual balance sheet was prepared for Colombo Clocks Ltd as at 31 March 2020. At 31 March you are also provided with the following information. 1. Sales forecasts available for 2020:...
-
Fab and Fast Ltd buys and sells motor vehicle accessories. The firms estimated sales and expenses for the first 4 months of 2020 are shown below. Actual sales for December 2019 were $900 000 and...
Study smarter with the SolutionInn App