The company is in the process of preparing a budget for October and has assembled the following
Question:
The company is in the process of preparing a budget for October and has assembled the following data:
Sales are budgeted at $360,000 for October and $370,000 for November. Of these sales, 35% will be for cash; the remainder will be credit sales. Forty percent of a month?s credit sales are collected in the month the sales are made, and the remaining 60% is collected in the following month. All of the September 30 accounts receivable will be collected in October.
The budgeted cost of goods sold is always 45% of sales and the ending merchandise inventory is always 30% of the following month?s cost of goods sold.
All merchandise purchases are on account. Thirty percent of all purchases are paid for in the month of purchase and 70% are paid for in the following month. All of the September 30 accounts payable to suppliers will be paid during October.
Selling and administrative expenses for October are budgeted at $80,600, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $3,090 for the month
Managerial Accounting
ISBN: 978-1259307416
16th edition
Authors: Ray Garrison, Eric Noreen, Peter Brewer