ABC Co. has been requested to prepare a quarterly budgeted income statement for 2021. The regional manager expects that sales in the first quarter of 2021 will increase in volume by 10% over the same quarter of the preceding year and will then increase by 5% for each succeeding quarter in 2021. The corporate head office has requested that the regional manager maintain an inventory in pesos equal to 16% of the next quarter's sales. Quarterly purchases average 45% of quarterly sales. Budgeted ending inventory on December 31, 2020, is P8,000. Quarterly salaries are P7,200 plus 10% of sales. All salaries are classified as sales salaries. Other quarterly expenses are estimated to be as follows: Rent expense P4,400 Depreciation on office equipment P2,000 Utilities expense P1,800 Miscellaneous expenses 2% of sales The income statement information for the first quarter of 2020 was as follows: Sales P150,000 Cost of goods sold 66,000 The December 31, 2021, balance sheet accounts include the following balances: Cash 26,000 Marketable Securities 27,894 Equipment 127,000 Accumulated Depreciation 52,000 Common Stock 68,000 Retained Earnings 21,000. Accounts receivable at December 31, 2021 are expected to be 8% of annual sales. 20% of the ending inventory is expected to have not yet been paid at December 31, 2021
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Prepare a budgeted quarterly income statement and balance sheet for the first quarter of 2021.
ABC Co. has been requested to prepare a quarterly
The corporate head office has requested that the regional manager maintain an inventory in pesos equal to 16% of the next quarter's sales. Quarterly purchases average 45% of quarterly sales. Budgeted ending inventory on December 31, 2020, is P8,000. Quarterly salaries are P7,200 plus 10% of sales. All salaries are classified as sales salaries. Other quarterly expenses are estimated to be as follows:
Rent expense P4,400
Utilities expense P1,800
Miscellaneous expenses 2% of sales
The income statement information for the first quarter of 2020 was as follows:
Sales P150,000
Cost of goods sold 66,000
The December 31, 2021, balance sheet accounts include the following balances:
Cash 26,000
Marketable Securities 27,894
Equipment 127,000
Common Stock 68,000
20% of the ending inventory is expected to have not yet been paid at December 31, 2021
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