Current assets as of December 31: Cash............... Accounts receivable.. Inventory.............. Buildings and equipment, net Accounts payable Common shares..... Retained earnings. Caption The following data relate to the operations of Gaudreau Company, which distributes consumer goods: ………………….. b. Actual and budgeted sales data are as follows: December (actual) January... February. March April... ****** Heading $6,000 $36,000 $9,800 $110,885 $32,550 $100,000 $30,135 a. The gross margin is 30% of sales. (In other words, cost of goods sold is 70% of sales.) Index $60,000 $70,000 $80,000 $85,000 $55,000 c. Sales are 40% for cash and 60% on credit. Credit sales are collected in the month following sale. The accounts receivable at December 31 are the result of December credit sales. d. Each month's ending inventory should equal 20% of the following month's budgeted cost of goods sold. e. One-quarter of a month's inventory purchases is paid for in the month of purchase; the other three-quarters is paid for in the following month. The accounts payable at December 31 are the result of December purchases of inventory. f. Monthly expenses are as follows: commissions, $12,000; rent, $1,800; other expenses (excluding depreciation), 8% of sales. Assume that these expenses are paid monthly, Depreciation is $2,400 for the quarter and includes depreciation on new assets acquired during the quarter. g. Equipment will be acquired for cash: $3,000 in January and $8,000 in February.
Current assets as of December 31: Cash............... Accounts receivable.. Inventory.............. Buildings and equipment, net Accounts payable Common shares..... Retained earnings. Caption The following data relate to the operations of Gaudreau Company, which distributes consumer goods: ………………….. b. Actual and budgeted sales data are as follows: December (actual) January... February. March April... ****** Heading $6,000 $36,000 $9,800 $110,885 $32,550 $100,000 $30,135 a. The gross margin is 30% of sales. (In other words, cost of goods sold is 70% of sales.) Index $60,000 $70,000 $80,000 $85,000 $55,000 c. Sales are 40% for cash and 60% on credit. Credit sales are collected in the month following sale. The accounts receivable at December 31 are the result of December credit sales. d. Each month's ending inventory should equal 20% of the following month's budgeted cost of goods sold. e. One-quarter of a month's inventory purchases is paid for in the month of purchase; the other three-quarters is paid for in the following month. The accounts payable at December 31 are the result of December purchases of inventory. f. Monthly expenses are as follows: commissions, $12,000; rent, $1,800; other expenses (excluding depreciation), 8% of sales. Assume that these expenses are paid monthly, Depreciation is $2,400 for the quarter and includes depreciation on new assets acquired during the quarter. g. Equipment will be acquired for cash: $3,000 in January and $8,000 in February.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Current assets as of December 31:
Cash............
Accounts receivable..
Inventory..........…....
Buildings and equipment, net.
Accounts payable
Common shares.....
Retained earnings.
Caption
The following data relate to the operations of Gaudreau Company, which distributes
consumer goods:
………………..
******
b. Actual and budgeted sales data are as follows:
December (actual)
January...
February.
March
April...
Heading
$6,000
$36,000
$9,800
$110,885
$32,550
$100,000
$30,135
a. The gross margin is 30% of sales. (In other words, cost of goods sold is 70% of
sales.)
$60,000
$70,000
$80,000
Index
$85,000
$55,000
c. Sales are 40% for cash and 60% on credit. Credit sales are collected in the month
following sale. The accounts receivable at December 31 are the result of December
credit sales.
d. Each month's ending inventory should equal 20% of the following month's budgeted
cost of goods sold.
e. One-quarter of a month's inventory purchases is paid for in the month of purchase;
the other three-quarters is paid for in the following month. The accounts payable at
December 31 are the result of December purchases of inventory.
f. Monthly expenses are as follows: commissions, $12,000; rent, $1,800; other
expenses (excluding depreciation), 8% of sales. Assume that these expenses are
paid monthly, Depreciation is $2,400 for the quarter and includes depreciation on
new assets acquired during the quarter.
g. Equipment will be acquired for cash: $3,000 in January and $8,000 in February.
Transcribed Image Text:2. Complete the following:
Budgeted cost of goods sold
Add desired ending inventory
Total needs
Less beginning inventory
Required purchases
Merchandise Purchasing Budget
February March
January
$49,000*
11.200**
$60,200
9.800
$50.400
*$70,000 sales X 70%-$49,000.
**$80,000 X 70% X 20% - $11,200.
Quarter
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