Selected values taken from Donegals annual master (static) budget for the current year appear below. Cash Sales,
Question:
Selected values taken from Donegal’s annual master (static) budget for the current year appear below.
Cash Sales, gross | $30,000 | Cost of Goods Sold | $19,000 |
Credit Sales, gross | $60,000 | Interest Expense | $8,000 |
Credit Collections (net of discount, from collection schedule) | $85,000 | Tax Expense | $5,040 |
Sales Discounts Granted (½ cash, ½ credit) | $1,200 | Property, Plant & Equipment, Beginning Balance | $85,000 |
Uncollectible Accounts Expense | $900 | Accumulated Depreciation, Beginning Balance | $15,000 |
Dividends Declared and Paid to Shareholders | $1,800 | Retained Earnings, Beginning Balance | $75,000 |
Merchandise Purchased | $15,000 | Equipment Purchases during the year | $12,000 |
Payments for Merchandise (from merchandise payment schedule) | $16,000 | Cash, Beginning Balance | $11,000 |
Selling & Administrative (includes $5,000 of depreciation expense) | $45,000 | Cash, Target Ending Balance | $10,000 |
Assume expenses that will require cash expenditures, such as taxes, are paid when incurred. Equipment purchases are paid at time of purchase. Put cash outflows in parentheses.
1). How much is Donegal’s expected cash excess (or deficiency) for the year?
2). What is Donegal’s budgeted net income for the year?
3). Determine the net budgeted ending value of Property, Plant & Equipment (net budgeted value = Cost – Accumulated Depreciation)?
Check figures:
1). $32,560
2). $10,860
3). $77,000