Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow: • Sales are budgeted at $308,000 for November, $328,000 for December, and $228,000 for January. • Collections are expected to be 65% in the month of sale and 35% in the month following the sale. • The cost of goods sold is 80% of sales. • The company desires to have an ending merchandise inventory at the end of each month equal to 70% of the next month's cost of goods sold. Payment for mer is made in the month following the purchase. Other monthly expenses to be paid in cash are $22,900. • Monthly depreciation is $30,000. • Ignore taxes. Assets Cash Balance Sheet October 31 Accounts receivable Merchandise inventory Property, plant and equipment, net of $624,000 accumulated depreciation Total assets Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings. Total liabilities and stockholders' equity $ 35,500 86,000 172,480 923,000 $ 1,216,980 $ 257,000 758,000 201,980 $ 1,216,980
Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow: • Sales are budgeted at $308,000 for November, $328,000 for December, and $228,000 for January. • Collections are expected to be 65% in the month of sale and 35% in the month following the sale. • The cost of goods sold is 80% of sales. • The company desires to have an ending merchandise inventory at the end of each month equal to 70% of the next month's cost of goods sold. Payment for mer is made in the month following the purchase. Other monthly expenses to be paid in cash are $22,900. • Monthly depreciation is $30,000. • Ignore taxes. Assets Cash Balance Sheet October 31 Accounts receivable Merchandise inventory Property, plant and equipment, net of $624,000 accumulated depreciation Total assets Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings. Total liabilities and stockholders' equity $ 35,500 86,000 172,480 923,000 $ 1,216,980 $ 257,000 758,000 201,980 $ 1,216,980
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:Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow:
• Sales are budgeted at $308,000 for November, $328,000 for December, and $228,000 for January.
• Collections are expected to be 65% in the month of sale and 35% in the month following the sale.
• The cost of goods sold is 80% of sales.
• The company desires to have an ending merchandise inventory at the end of each month equal to 70% of the next month's cost of goods sold. Payment for merchandise
is made in the month following the purchase.
• Other monthly expenses to be paid in cash are $22,900.
Monthly depreciation is $30,000.
Ignore taxes.
●
Assets
Cash
Balance Sheet
October 31
Accounts receivable
Merchandise inventory
Property, plant and equipment, net of $624,000 accumulated depreciation
Total assets
Liabilities and Stockholders' Equity
Accounts payable
Common stock
Retained earnings
Total liabilities and stockholders' equity
$ 35,500
86,000
172,480
923,000
$ 1,216,980
$ 257,000
758,000
201,980
$ 1,216,980
Transcribed Image Text:The cost of December merchandise purchases would be:
Multiple Choice
O
O
O
O
$262,400
$206,400
$127,680
$246,400
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