BURTON OFFICE SUPPLY Balance Sheet March 31, 2018 Assets Current Assets: Cash $ 32,000 Accounts Receivable 12,000 Merchandise Inventory 40,000 Prepaid Insurance 1,600 Total Current Assets $ 85,600 Property, Plant, and Equipment Equipment and Fixtures 40,000 Less: Accumulated Depreciation (12,000) 28,000 Total Assets $ 113,600 Liabilities Current Liabilities: Accounts Payable $ 16,000 Salaries and Commissions Payable 2,700 Total Liabilities $ 18,700 Stockholders' Equity Common Stock, no par 25,000 Retained Earnings 69,900 Total Stackholders' Equity 94,900 Total Liabilities and Stockholders' Equity $ 113,600
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.
Preparing an operating budget—sales budget; inventory, Purchases and COGS budget; and S&A expense budget
Burton Office Supply’s March 31, 2018,
The budget committee of Burton Office Supply has assembled the following data:
- Sales in April are expected to be $200,000. Burton
Forecasts that monthly sales will increase 2% over April sales in May. June’s sales will increase by 4% over April sales. July sales will increase 20% over April sales. - Burton maintains inventory of $15,000 plus 25% of the cost of goods sold budgeted for the following month. Cost of goods sold equal 50% of sales revenue.
- Monthly salaries amount to $7,000. Sales commissions equal 5% of sales for that month.
Other monthly expenses are as follows:
• Rent: $2,000
•
• Insurance: $100
• Income tax: $2,200
Requirements
- Prepare Burton’s sales budget for April and May 2018. Round all calculations to the nearest dollar.
- Prepare Burton’s inventory, purchases, and cost of goods sold budget for April and May.
- Prepare Burton’s selling and administrative expense budget for April and May.
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