C10.58 Solid State sells electronic products. The controller is responsible for preparing the master budget and has accumulated the following information: Balances at January 1 are expected to be as follows: Cash Accounts receivable $5.500 416,100 Month November (actual) December (actual) January (projected) February (projected) March (projected) April (projected) Inventories Accounts payable The budget is to be based on the following assumptions: 1. Each month's sales are billed on the last day of the month. 2. Customers are allowed a 3% discount if their payment is made within 10 days after the billing date. Receivables are booked at gross. 3. The company collects 60% of the billings within the discount period, 25% by the end of the month after the date of sale, and 9% by the end of the second month after the date of sale; 6% prove uncollectible. 4. It pays 54% of all materials purchases and the selling. general, and administrative expenses in the month purchased and the remainder in the following month. Each month's units of ending inventory are equal to 130% of the next month's units of sales. 5. The cost of each unit of inventory is $20. 6. Selling, general, and administrative expenses, of which $2,000 is for depreciation, are equal to 15% of the current month's sales. 7. Actual and projected sales are as follows: Instructions a. Calculate the budgeted cash disbursements during the month of February. b. Calculate the budgeted cash collections during the month of January. c. Calculate the budgeted number of units of inventory to be purchased during the month of March. $309.400 133,055 Sales $354,000 363,000 357,000 342,000 360,000 366,000 Units 11,800 12,100 11,900 11,400 12,000 12,200
C10.58 Solid State sells electronic products. The controller is responsible for preparing the master budget and has accumulated the following information: Balances at January 1 are expected to be as follows: Cash Accounts receivable $5.500 416,100 Month November (actual) December (actual) January (projected) February (projected) March (projected) April (projected) Inventories Accounts payable The budget is to be based on the following assumptions: 1. Each month's sales are billed on the last day of the month. 2. Customers are allowed a 3% discount if their payment is made within 10 days after the billing date. Receivables are booked at gross. 3. The company collects 60% of the billings within the discount period, 25% by the end of the month after the date of sale, and 9% by the end of the second month after the date of sale; 6% prove uncollectible. 4. It pays 54% of all materials purchases and the selling. general, and administrative expenses in the month purchased and the remainder in the following month. Each month's units of ending inventory are equal to 130% of the next month's units of sales. 5. The cost of each unit of inventory is $20. 6. Selling, general, and administrative expenses, of which $2,000 is for depreciation, are equal to 15% of the current month's sales. 7. Actual and projected sales are as follows: Instructions a. Calculate the budgeted cash disbursements during the month of February. b. Calculate the budgeted cash collections during the month of January. c. Calculate the budgeted number of units of inventory to be purchased during the month of March. $309.400 133,055 Sales $354,000 363,000 357,000 342,000 360,000 366,000 Units 11,800 12,100 11,900 11,400 12,000 12,200
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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.
Question
Transcribed Image Text:¹7C10.58 Solid State sells electronic products. The controller is responsible for preparing the master budget and has accumulated the following information:
Balances at January 1 are expected to be as follows:
Cash
Accounts receivable
$ 5,500
416,100
Month
November (actual)
December (actual)
January (projected)
February (projected)
The budget is to be based on the following assumptions:
1. Each month's sales are billed on the last day of the month.
2. Customers are allowed a 3% discount if their payment is made within 10 days after the billing date. Receivables are booked at gross.
3. The company collects 60% of the billings within the discount period, 25% by the end of the month after the date of sale, and 9% by the end of the second month after the date of sale; 6% prove
uncollectible.
March (projected)
April (projected)
Inventories
Accounts payable
4. It pays 54% of all materials purchases and the selling, general, and administrative expenses in the month purchased and the remainder in the following month. Each month's units of ending inventory are
equal to 130% of the next month's units of sales.
5. The cost of each unit of inventory is $20.
6. Selling, general, and administrative expenses, of which $2,000 is for depreciation, are equal to 15% of the current month's sales.
7. Actual and projected sales are as follows:
Instructions
a. Calculate the budgeted cash disbursements during the month of February.
b. Calculate the budgeted cash collections during the month of January.
c. Calculate the budgeted number of units of inventory to be purchased during the month of March.
$309,400
133,055
Sales
$354,000
363,000
357,000
342,000
360,000
366,000
Units
11,800
12,100
11,900
11,400
12,000
12,200
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