Digital Ltd is a retailer of a popular digital watch and provides you with the following information for the preparation of its 1st quarter budget: July - September. Budgeted sales are as follows: Month Sales ($) Units sold May 250,000 2,500 June 280,000 2,800 July 350,000 3,500 August 400,000 4,000 September 300,000 3,000 October 360,000 3,600 Additional information: i) Purchases are budgeted at $5.00 per unit and are paid for in full in the month after purchase. ii) Ending inventory must equal 40% of of the next month's sales. v) Sales (which are all on credit) are collected as follows: 60% in the month of sale; 30% in the month after the sale; 5% in the second month after the sale. v) The balance in the bank account as at 30 June is $10,000. Required: a) Prepare a purchases budget (in units and $) for the 1st quarter. (Purchases are based on expected sales).

Digital Ltd is a retailer of a popular digital watch and provides you with the following information for the preparation of its 1st quarter budget: July - September. Budgeted sales are as follows: Month Sales ($) Units sold May 250,000 2,500 June 280,000 2,800 July 350,000 3,500 August 400,000 4,000 September 300,000 3,000 October 360,000 3,600 Additional information: i) Purchases are budgeted at $5.00 per unit and are paid for in full in the month after purchase. ii) Ending inventory must equal 40% of of the next month's sales. v) Sales (which are all on credit) are collected as follows: 60% in the month of sale; 30% in the month after the sale; 5% in the second month after the sale. v) The balance in the bank account as at 30 June is $10,000. Required: a) Prepare a purchases budget (in units and $) for the 1st quarter. (Purchases are based on expected sales).

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information: Line Item Description Sales September October November $103,000 $122,000 $166,000 Manufacturing costs 43,000 52,000 60,000 Selling and administrative expenses Capital expenditures 36,000 37,000 63,000 40,000 The company expects to sell about 10% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month following the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent $10,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in January, and the annual property taxes are paid in December. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month. Current assets as of…
Beauty Spa & Co. manufactures a specialised luxury spa that is supplied to five-star hotels around the country. The owner provides you with the following information to prepare its 1st quarter budget: July, August, and September. Budgeted sales are as follows: Month Sales ($) Units Sold May 25,000 250 June 28,000 280 July 30,000 300 August 40,000 400 September 35,000 350 October 37,000 370 Additional information: i) Purchases are budgeted at $5.00 per unit and are paid for in full in the month after purchase. ii) Closing inventory must equal 50% of the next month’s sales. iii) Sales (which are all on credit) are collected as follows: 60% in the month of sale; 30% in the month after the sale; 5% in the second month after the sale. iv) The balance in the bank account as of 30 June is $10,000. Required (show your workings for each question): Prepare the schedule of expected cash collections from…
Ruiz Company provides the following budgeted sales for the next four months. The company wants to end each month with ending finished goods inventory equal to 30% of next month's budgeted unit sales. Finished goods inventory on April 1 is 153 units. Prepare a production budget for the months of April, May, and June. Budgeted sales units. April 510 Budgeted sales units Add: Desired ending inventory Next period budgeted sales units Ratio of inventory to future sales Budgeted beginning inventory units Total required units Units to produce May 590 RUIZ COMPANY Production Budget April June 540 590 30% July 630 May 540 30% June 630 30%
Wala Incorporated bases its selling and administrative expense budget on the number of units sold. The variable selling and administrative expense is $3.70 per unit. The budgeted fixed selling and administrative expense is $30,360 per month, which includes depreciation of $3,630. The remainder of the fixed selling and administrative expense represents current cash flows. The sales budget shows 3,100 units are planned to be sold in July. Required: Prepare the selling and administrative expense budget for July.
Ramos Company provides the following budgeted production for the next four months. Units to produce April 620 May June July 750 720 720 Each finished unit requires 5 pounds of direct materials. The company wants to end each month with direct materials inventory equal to 30% of next month's production needs. Beginning direct materials inventory for April was 930 pounds. Direct materials cost $2 per pound. Prepare a direct materials budget for April, May, and June. Units to produce Materials needed for production (pounds) Total materials required (pounds) Materials to purchase (pounds) Materials cost per pound Cost of direct materials purchases RAMOS COMPANY Direct Materials Budget April May June 620 750 720 units 0
Ivanhoe Design provided the following budgeted information for April through July: April May June July Projected sales $112320 $132840 $124200 $142560 Projected merchandise purchases $88560 $99360 $84240 $71280 The cash balance on June 1 is $12960. The company pays 40% of merchandise purchases in the month purchased and 60% in the following month. General operating expenses are budgeted to be $33480 per month of which depreciation is $3240 of this amount. Management pays operating expenses in the month incurred. The company makes loan payments of $4320 per month of which $648 is interest and the remainder is principal. How much are budgeted cash disbursements for June? $111024. $127872. $93312. $68256.
Ivanhoe Company, a retailer of camping supplies has budgeted activity for January using the following data: January cash sales January credit sales Collections from December credit sales Selling and administrative costs (paid in month of purchase) Depreciation expense Merchandise Inventory, January 1 Merchandise Inventory, January 31 Cost of goods sold is 30% of Cooper's selling price All purchases are paid in cash Credit sales are collected 60% in the month of sale, 30% in the following month, and 10% is deemed uncollectible What is Ivanhoe's budgeted cash disbursements for January? Total January disbursements $ $59,000 386,000 155,000 59,000 22,000 199,000 211,000
The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information: September October November $89,000 $109,000 $146,000 37,000 47,000 31,000 33,000 Sales Manufacturing costs Selling and administrative expenses Capital expenditures The company expects to sell about 10% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month following the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent $7,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in January, and the annual property taxes are paid in December. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month. Current assets as of September 1 include cash of $34,000, marketable…
The following information is available to assist you in preparing a company's cash budget. a. The cash balance on July 1 is $41,000. b. Actual sales for May and June and expected sales for July are as follows: May $ 68,400 $ 87,400 $ 95,800 $ 415,000 $ 614,000 $ 692,000 June July Cash sales Sales on account Sales on account are collected over a three-month period as follows: 20% collected in the month of sale, 60% collected in the month following sale, and 18% collected In the second month following sale. The remaining 2% is uncollectible. C. Purchases of inventory will total $376,000 for July. Thirty percent of a month's Inventory purchases are paid during the month of purchase. The accounts payable remaining from June's inventory purchases total $174,500, all of which will be paid in July. d. Selling and administrative expenses are budgeted at $452,000 for July. Of this amount, $63,500 is for depreciation. e. A new web server for the Marketing Department costing $86,500 will be…
Harris Inc., has budgeted sales in units for the next five months as follows: June July August September October 9,400 units 7,800 units 7,300 units 5,400 units 4,100 units Past experience has shown that the ending inventory for each month should be equal to 20% of the next month's sales in units. The inventory on May 31 contained 1,880 units. The company needs to prepare a production budget for the next five months.
The controller of Sonoma Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information: May June July Sales $132,000 $164,000 $210,000 Manufacturing costs 55,000 71,000 76,000 Selling and administrative expenses 38,000 44,000 46,000 Capital expenditures _ _ 111,000 The company expects to sell about 12% of its merchandise for cash. Of sales on account, 65% are expected to be collected in the month following the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent $8,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in September, and the annual property taxes are paid in November. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month. Current assets as…
Moore Wholesalers is preparing its merchandise purchases budget. Budgeted sales are $400,000 for April and $480,000 for May. Cost of goods sold is expected to be 65% of sales. The company’s desired ending inventory is 20% of the following month’s cost of goods sold.Compute the required purchases for April. Moore WholesalersPurchases Budget $ : : $