Income Statement and Budgeted Balance Sheet. Crow Enterprises is a merchandising company that is preparing a master budget for the third quan of the calendar year. The company's balance sheet as of June 30th is shown below: Crow Enterprises Balance Sheet June 30 Assets $ 80,000 135,000 41,250 Plant and equipment, net of depreciation_211,000 S 457,250 Cash Accounts receivable Inventory Total assets Liabilities and Stockholders' Equity $ 72,000 345,000 50,250 Accounts payable Common stock Retained earnings Total liabilities and stockholders' equity $ 467,250 Crow's managers have made the following additional assumptions and estimates: 1. Estimated sales for July, August, September, and October will be $220,000, $240,000, $230,000, and $250,000, respectively. 2. All sales are on credit and all credit sales are collected. Each month's credit sales are collected 35% in the month of sale and 65% in the month following the sale. All of the accounts receivable at June 30 will be collected in July. 3. Each month's ending inventory must equal 25% of the cost of next month's sales. The cos of goods sold is 75% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. ll the accounts payable at June 30 will be paid in July. 4. Monthly selling and administrative expenses are always $40,000. Each month $6,000 of th total amount is depreciation expense and the remaining $34,000 relates to expenses that paid in the month they are incurred. 5. The company does not plan to borrow money or pay or declare dividends during the quarte ended September 30. The company does not plan to issue any common stock or repurcha
Income Statement and Budgeted Balance Sheet. Crow Enterprises is a merchandising company that is preparing a master budget for the third quan of the calendar year. The company's balance sheet as of June 30th is shown below: Crow Enterprises Balance Sheet June 30 Assets $ 80,000 135,000 41,250 Plant and equipment, net of depreciation_211,000 S 457,250 Cash Accounts receivable Inventory Total assets Liabilities and Stockholders' Equity $ 72,000 345,000 50,250 Accounts payable Common stock Retained earnings Total liabilities and stockholders' equity $ 467,250 Crow's managers have made the following additional assumptions and estimates: 1. Estimated sales for July, August, September, and October will be $220,000, $240,000, $230,000, and $250,000, respectively. 2. All sales are on credit and all credit sales are collected. Each month's credit sales are collected 35% in the month of sale and 65% in the month following the sale. All of the accounts receivable at June 30 will be collected in July. 3. Each month's ending inventory must equal 25% of the cost of next month's sales. The cos of goods sold is 75% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. ll the accounts payable at June 30 will be paid in July. 4. Monthly selling and administrative expenses are always $40,000. Each month $6,000 of th total amount is depreciation expense and the remaining $34,000 relates to expenses that paid in the month they are incurred. 5. The company does not plan to borrow money or pay or declare dividends during the quarte ended September 30. The company does not plan to issue any common stock or repurcha
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Schedules of Expected Cash Collections and Disbursements; Budgeted
Income Statement and Budgeted Balance Sheet.
Crow Enterprises is a merchandising company that is preparing a master budget for the third quarter
of the calendar year. The company's balance sheet as of June 30th is shown below:
Crow Enterprises
Balance Sheet
June 30
Assets
$ 80,000
135,000
41,250
Plant and equipment, net of depreciation_211,000
$ 457,250
Cash
Accounts receivable
Inventory
Total assets
Liabilities and Stockholders' Equity
Accounts payable
Common stock
Retained earnings
$ 72,000
345,000
50,250
Total liabilities and stockholders' equity $ 467,250
Crow's managers have made the following additional assumptions and estimates:
1. Estimated sales for July, August, September, and October will be $220,000, $240,000,
$230,000, and $250,000, respectively.
2. All sales are on credit and all credit sales are collected. Each month's credit sales are
collected 35% in the month of sale and 65% in the month following the sale. All of the
accounts receivable at June 30 will be collected in July.
3. Each month's ending inventory must equal 25% of the cost of next month's sales. The cost
of goods sold is 75% of sales. The company pays for 40% of its merchandise purchases in
the month of the purchase and the remaining 60% in the month following the purchase. All of
the accounts payable at June 30 will be paid in July.
4. Monthly selling and administrative expenses are always $40,000. Each month $6,000 of this
total amount is depreciation expense and the remaining $34,000 relates to expenses that are
paid in the month they are incurred.
5. The company does not plan to borrow money or pay or declare dividends during the quarter
ended September 30. The company does not plan to issue any common stock or repurchase
its own stock during the quarter ended September 30.
Transcribed Image Text:2. You are provided with the following merchandise purchase budget for Q3. Prepare a schedule of
expected cash disbursements for merchandise purchases for July, August, and September also
showing the 3rd quarter totals.
Budgeted COGS (75% of sales)
add: desired ending inventory (25%)
equals: total needs
less: beginning inventory
equals: required purchases
July
165,000|
45,000
210,000
41,250
168,750
August September
180,000
172,500
43,125
46,875
223,125
219,375|
45,000
43,125
178,125
176,250
Q3
517,500
46,875
564,375
41,250
523,125
2b. Schedule of expected cash disbursements
July
August
September
Q3
From A/P
From July purchases
From Aug purchases
From Sep purchases
Total cash disbursements
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