Oui-Got Stuff is preparing its budget for the coming year. Below is information about the 2nd quarter, which is not yet finished. The following additional information is available: Budgeted Income statement for July 200x: The budgeted income statement for the 2nd quarter is: Sales July $ 32,000 Oui-Got Stuff, Inc. Budgeted Income Statement For the 2nd Quarter Ended 200x Cost of goods sold 21,000 Gross profit 11,000 April $ 22,000 11,000 May $ 25,000 June $ 28,000 Less: Sales Selling expenses 4,200 Cost of goods sold 13,000 16,000 Administrative expenses 3,600 Gross profit 11,000 12,000 12,000 Total Net income 7,800 $3,200 Less: Selling expenses 2,300 3,000 3,400 Administrative expenses 2,600 3,000 3,200 1. 80% of monthly sales are on account (i.e., for credit). The remainder is for cash. 2. Credit sales are collected as follows: Total Net income 4,900 6,000 6,600 • 10% in the month of credit sales • 60% in the month following the credit sales The remainder in the 2nd month following the credit sales $6.100 $6,000 $5.400 Oui-Got Stuff has also completed the purchases budget, as follows: 3. Total budgeted sales for February are $15,000. 4. Total budgeted sales for March are $16,000. 5. Oui-Got assumes it would pay for budgeted purchases 65% in the month of purchase and Oui-Got Stuff, Inc. Purchases Budget For the 2nd Quarter Ended 200x 35% in the month following the purchase. 6. Budgeted purchases for March are $12,000. 7. For the months of April and May, the company must make a $5,000 payment for an outstanding bank note. 8. Qui-Got must maintain a cash balance of at least $4,000 at the end of each month. 9. The budgeted cash balance at April 1 is $4,500. 10. When ending cash balances are less than $4,000, they make a short-term borrowing from their local bank. However, all borrowings must be made in multiples of $100. These short- term loans are repaid at the end of the year, which is December 31st. Budgeted cost of goods sold April $11,000 May $ 13,000 June $ 16,000 Plus: desired ending inventory 3,250 4,000 5,250 Total inventory needs 14,250 17,000 21,250 (2,500) $ 11,750 (3,250) $ 13,750 (4,000) $ 17,250 Less: beginning inventory Budgeted purchases The company needs to prepare its budgeted cash receipts, budgeted cash payments for purchases, and monthly cash budget schedules for April, May and June. Required: a. Prepare a monthly budgeted operating cash receipts schedule for the 2nd quarter, i.e. April, May, and June. b. Prepare a monthly budgeted cash disbursements schedule for purchases for April, May, and June. c. Prepare a monthly total cash budget for April, May, and June. In that schedule, show borrowings from the company's local bank as needed to maintain the minimum cash balance. (Note: In your schedules show all three months, i.e. in 3 columns, rather than preparing separate schedules for each month.)
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.
![Problem 4
Qui-Got Stuff is preparing its budget for the coming year. Below is information about the 2nd quarter,
which is not yet finished.
The following additional information is available:
Budgeted Income statement for July 200x:
The budgeted income statement for the 2nd
quarter is:
July
$ 32,000
Qui-Got Stuff, Inc.
Budgeted Income Statement
For the 2nd Quarter Ended 200x
Sales
Cost of goods sold
21,000
Gross profit
11,000
June
$ 28,000
April
May
Less:
Sales
$ 22,000
$ 25,000
Selling expenses
4,200
Cost of goods sold
11,000
13,000
16,000
Gross profit
11,000
12,000
12,000
Administrative expenses
3,600
Total
7,800
Less:
Selling expenses
2,300
3,000
3,400
Net income
$ 3,200
Administrative expenses
2,600
3,000
3,200
1. 80% of monthly sales are on account (i.e., for credit). The remainder is for cash.
2. Credit sales are collected as follows:
Total
4,900
6,000
6,600
10% in the month of credit sales
Net income
$ 6,100
$ 6,000
$ 5,400
60% in the month following the credit sales
The remainder in the 2nd month following the credit sales
Qui-Got Stuff has also completed the purchases budget, as follows:
3. Total budgeted sales for February are $15,000.
4. Total budgeted sales for March are $16,000.
5. Qui-Got assumes it would pay for budgeted purchases 65% in the month of purchase and
35% in the month following the purchase.
6. Budgeted purchases for March are $12,000.
7. For the months of April and May, the company must make a $5,000 payment for an
outstanding bank note.
8. Qui-Got must maintain a cash balance of at least $4,000 at the end of each month.
9. The budgeted cash balance at April 1 is $4,500.
10. When ending cash balances are less than $4,000, they make a short-term borrowing from
their local bank. However, all borrowings must be made in multiples of $100. These short-
term loans are repaid at the end of the year, which is December 31st.
Qui-Got Stuff, Inc.
Purchases Budget
For the 2nd Quarter Ended 200x
April
May
$ 13,000
4,000
17,000
(3,250)
$ 13,750
June
Budgeted cost of goods sold
Plus: desired ending inventory
$ 11,000
$ 16,000
3,250
5,250
Total inventory needs
14,250
21,250
Less: beginning inventory
Budgeted purchases
(2,500)
$ 11,750
(4,000)
$ 17,250
The company needs to prepare its budgeted cash receipts, budgeted cash payments for purchases, and
monthly cash budget schedules for April, May and June.
Required:
a. Prepare a monthly budgeted operating cash receipts schedule for the 2nd quarter, i.e. April, May,
and June.
b. Prepare a monthly budgeted cash disbursements schedule for purchases for April, May, and June.
c. Prepare a monthly total cash budget for April, May, and June. In that schedule, show borrowings
from the company's local bank as needed to maintain the minimum cash balance.
(Note: In your schedules show all three months, i.e. in 3 columns, rather than preparing separate
schedules for each month.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3cca2471-f089-4df3-91eb-fc0372255974%2F6f3a8193-3fe4-4d73-9510-2e2331232ed5%2Fq5s0kii_processed.jpeg&w=3840&q=75)
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