Budgeted Income Statement For the year ended December 31,2020 Sales(all on credit) 280 000 Cost of goods sold 128 000 Gross income 152 000 Administrative expenses 53 600 Operating income 98 400 Interest Expense 2 400 Income before tax 96 000 Income tax (40%) 38 400 Net income 57 600 Additional details: Accounts Receivable Year 1- 80,000; Year 2- 56,000 Inventory Year 1- 56,000; Year 2- 64,000 Accounts Payable Year 1- 62,400; Year 2- 68,000 (Use 360 days) Compute the following: 1. Merchandise Inventory turnover 2. Average age of inventories or number of days of inventory 3. Receivables turnover ratio 4. Average age of receivables or number of receivables average collection period
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.
For the year ended December 31,2020
Sales(all on credit) 280 000
Cost of goods sold 128 000
Gross income 152 000
Administrative expenses 53 600
Operating income 98 400
Interest Expense 2 400
Income before tax 96 000
Income tax (40%) 38 400
Net income 57 600
Additional details:
Inventory Year 1- 56,000; Year 2- 64,000
Accounts Payable Year 1- 62,400; Year 2- 68,000
(Use 360 days)
Compute the following:
1. Merchandise Inventory turnover
2. Average age of inventories or number of days of inventory
3. Receivables turnover ratio
4. Average age of receivables or number of receivables average collection period
Step by step
Solved in 4 steps
