Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow: Sales are budgeted at $297,000 for November, $317,000 for December, and $217,000 for January. Collections are expected to be 70% in the month of sale and 30% in the month following the sale. The cost of goods sold is 75% of sales. The company desires to have an ending merchandise inventory at the end of each month equal to 80% 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 $21,800. Monthly depreciation is $24,500. Ignore taxes. Balance Sheet October 31 Assets Cash $ 28,500 Accounts receivable Merchandise inventory Property, plant and equipment, net of $624,000 accumulated depreciation 1,011,000 Total assets $ 1,298,200 Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings 80,500 178,200 $ 243,000 747,000 308,200
Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow: Sales are budgeted at $297,000 for November, $317,000 for December, and $217,000 for January. Collections are expected to be 70% in the month of sale and 30% in the month following the sale. The cost of goods sold is 75% of sales. The company desires to have an ending merchandise inventory at the end of each month equal to 80% 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 $21,800. Monthly depreciation is $24,500. Ignore taxes. Balance Sheet October 31 Assets Cash $ 28,500 Accounts receivable Merchandise inventory Property, plant and equipment, net of $624,000 accumulated depreciation 1,011,000 Total assets $ 1,298,200 Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings 80,500 178,200 $ 243,000 747,000 308,200
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 $297,000 for November, $317,000 for December, and $217,000 for January.
Collections are expected to be 70% in the month of sale and 30% in the month following the sale.
The cost of goods sold is 75% of sales.
The company desires to have an ending merchandise inventory at the end of each month equal to 80% 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 $21,800.
Monthly depreciation is $24,500.
Ignore taxes.
Balance Sheet
October 31
Assets
Cash
$25,950
$85,475
$33,575
$ 28,500
Accounts receivable
Merchandise inventory
Property, plant and equipment, net of $624,000 accumulated depreciation 1,011,000
Total assets
$ 1,298,200
Liabilities and Stockholders' Equity
Accounts payable
Common stock
Retained earnings
Total liabilities and stockholders' equity
The difference between cash receipts and cash disbursements for December would be:
Multiple Choice
$54.450
80,500
178,200
$ 243,000
747,000
308,200
$ 1,298,200
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