Ceradyne operates a computer training center. The following data relate to the preparation of a master budget for January 2021 1. At the end of 2020, the company's general ledger indicated the following balances: Cash Accounts receivable Equipment (net) 2 3. Total 4. 6. 7. Debits 8. $ 68,000 36,000 111,000 $ 215,000 Credits Accounts Payable Note payable Common stock Retained earnings $ 44,000 58,800 21,000 91,200 $ 215,000 Tuition revenue in December 2020 was $80,000, and tuition revenue budgeted for January 2021 is $110,000. 55 percent of tuition revenue is collected in the month earned, and 45 percent is collected in the subsequent month. The receivable balance at the end of 2020 reflects tuition earned in December 2020. Monthly expenses (excluding interest expense) are budgeted as follows: salaries, $51.000; rent, $4,200; depreciation on equipment, $7,000; utilities, $2,100; other, $720. Expenses are paid in the month incurred. Purchases of equipment are paid in the month after purchase. The $44,000 payab at the end of 2020 represents money owed for the purchase of computer equipment in December 2020. The company intends to purchase $42,000 of computer equipment in January 2021. The anticipated $7,000 per month of depreciation (see number 4) reflects the addition of $2,100 of monthly depreciation related to this purchase. The note is at 14 percent per annum and requires monthly interest payments of $686. The payments are made on the 20th each month. The principal must be paid in February 2022. The tax rate is 20 percent. Ceradyne Budgeted Income Statement For the Month Ended January 31, 2021
Ceradyne operates a computer training center. The following data relate to the preparation of a master budget for January 2021 1. At the end of 2020, the company's general ledger indicated the following balances: Cash Accounts receivable Equipment (net) 2 3. Total 4. 6. 7. Debits 8. $ 68,000 36,000 111,000 $ 215,000 Credits Accounts Payable Note payable Common stock Retained earnings $ 44,000 58,800 21,000 91,200 $ 215,000 Tuition revenue in December 2020 was $80,000, and tuition revenue budgeted for January 2021 is $110,000. 55 percent of tuition revenue is collected in the month earned, and 45 percent is collected in the subsequent month. The receivable balance at the end of 2020 reflects tuition earned in December 2020. Monthly expenses (excluding interest expense) are budgeted as follows: salaries, $51.000; rent, $4,200; depreciation on equipment, $7,000; utilities, $2,100; other, $720. Expenses are paid in the month incurred. Purchases of equipment are paid in the month after purchase. The $44,000 payab at the end of 2020 represents money owed for the purchase of computer equipment in December 2020. The company intends to purchase $42,000 of computer equipment in January 2021. The anticipated $7,000 per month of depreciation (see number 4) reflects the addition of $2,100 of monthly depreciation related to this purchase. The note is at 14 percent per annum and requires monthly interest payments of $686. The payments are made on the 20th each month. The principal must be paid in February 2022. The tax rate is 20 percent. Ceradyne Budgeted Income Statement For the Month Ended January 31, 2021
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:Ceradyne operates a computer training center. The following data relate to the preparation of a master budget for January 2021.
1. At the end of 2020, the company's general ledger indicated the following balances:
Cash
Accounts receivable
Equipment (net)
Total
2.
3.
4.
5.
6.
7.
8.
Debits
Less
Rent
V
Salaries
$ 68,000
Depreciation
36,000
Utilities
111,000
Other expenses
$ 215.000
Tuition revenue in December 2020 was $80,000, and tuition revenue budgeted for January 2021 is $110,000.
55 percent of tuition revenue is collected in the month earned, and 45 percent is collected in the subsequent month. The
receivable balance at the end of 2020 reflects tuition earned in December 2020.
Total expense
Monthly expenses (excluding interest expense) are budgeted as follows: salaries, $51,000; rent, $4,200: depreciation on
equipment, $7,000; utilities, $2,100; other, $720.
Net income/(loss)
Expenses are paid in the month incurred. Purchases of equipment are paid in the month after purchase. The $44,000 payable
at the end of 2020 represents money owed for the purchase of computer equipment in December 2020.
Credits
The company intends to purchase $42,000 of computer equipment in January 2021. The anticipated $7,000 per month of
depreciation (see number 4) reflects the addition of $2,100 of monthly depreciation related to this purchase.
Accounts Payable
Note payable.
The note is at 14 percent per annum and requires monthly interest payments of $686. The payments are made on the 20th of
each month. The principal must be paid in February 2022.
The tax rate is 20 percent.
Common stock
Retained earnings
V
$
eTextbook and Media
44,000
58,800
21,000
91,200
$ 215,000
Ceradyne
Budgeted Income Statement
For the Month Ended January 31, 2021 V
51,000 i
4,200
7,000 i
2,100 i
720 i
$
1000
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