Atomic Air, Inc. sells athletic wear to retail stores with clientele looking for something unique and different. The company has been working through a budgeting process to help them make better managerial decisions regarding the future. Atomic Air's accountants have pulled together the following information and estimates: • Sales are budgeted at $291,000 for January, $311,000 for February, and $211,000 for March. • The company expects to collect 70% from its customers in the month of sale and 30% in the month following the sale. • The cost of goods sold is 75% of sales. . The desired ending inventory at the end of each month is equal to 80% of the next month's cost of goods sold. . All inventory purchases are paid in the month following the purchase. • Other monthly expenses to be paid in cash are $21,200. . Monthly depreciation is $21,500. . Ignore taxes. Assets Cash Accounts receivable Merchandise inventory Property, plant and equipment, net of $624,000 accumulated depreciation Total assets Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings Total liabilities and stockholders' equity Estimated accounts payable at the end of February would be: Multiple Choice OOOO $126,600 Balance Sheet December 31 $173.250 $46,650 $233,250 $ 25,500 77,500 174,600 1,027,000 $ 1,304,600 $ 240,000 741,000 323,600 $ 1,304,600
Atomic Air, Inc. sells athletic wear to retail stores with clientele looking for something unique and different. The company has been working through a budgeting process to help them make better managerial decisions regarding the future. Atomic Air's accountants have pulled together the following information and estimates: • Sales are budgeted at $291,000 for January, $311,000 for February, and $211,000 for March. • The company expects to collect 70% from its customers in the month of sale and 30% in the month following the sale. • The cost of goods sold is 75% of sales. . The desired ending inventory at the end of each month is equal to 80% of the next month's cost of goods sold. . All inventory purchases are paid in the month following the purchase. • Other monthly expenses to be paid in cash are $21,200. . Monthly depreciation is $21,500. . Ignore taxes. Assets Cash Accounts receivable Merchandise inventory Property, plant and equipment, net of $624,000 accumulated depreciation Total assets Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings Total liabilities and stockholders' equity Estimated accounts payable at the end of February would be: Multiple Choice OOOO $126,600 Balance Sheet December 31 $173.250 $46,650 $233,250 $ 25,500 77,500 174,600 1,027,000 $ 1,304,600 $ 240,000 741,000 323,600 $ 1,304,600
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
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Transcribed Image Text:Atomic Air, Inc. sells athletic wear to retail stores with clientele looking for something unique and different. The company has been working through a budgeting process to help them make better managerial decisions regarding the future. Atomic Air's accountants have pulled together the following information and estimates:
• Sales are budgeted at $291,000 for January, $311,000 for February, and $211,000 for March.
• The company expects to collect 70% from its customers in the month of sale and 30% in the month following the sale.
• The cost of goods sold is 75% of sales.
• The desired ending inventory at the end of each month is equal to 80% of the next month's cost of goods sold.
• All inventory purchases are paid in the month following the purchase.
• Other monthly expenses to be paid in cash are $21,200.
Monthly depreciation is $21,500.
. Ignore taxes.
Assets
Cash
Accounts receivable
Merchandise inventory
Property, plant and equipment, net of $624,000 accumulated depreciation
Total assets
Liabilities and Stockholders' Equity
Accounts payable
Common stock
Retained earnings
Total liabilities and stockholders' equity
Estimated accounts payable at the end of February would be:
Multiple Choice
O
O
$126,600
Balance Sheet
December 31
$173,250
$46,650
$233,250
$ 25,500
77,500
174,600
1,027,000
$ 1,304,600
$ 240,000
741,000
323,600
$ 1,304,600
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