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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.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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: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.
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
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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