Prepare the Cash budget along with the supporting schedules necessary for the quarter ending December 31, 2005
This is not a graded question
R A Chad Associates, a merchandising company, prepares its
The following data have been assembled to assist in the preparation of the master budget for the
final quarter.
(a) As of September 30, 2005, the company’s balance sheet showed the following account
balances:
Cash $18 000
Accounts receivables 96 000
Inventory 25 200
Building & equipment (net) 428 200
Accounts payable $36 600
Capital 380 000
Retained earnings 150 800
$567 400 $567 400
(b) Actual sales for September and budgeted sales for the final quarter are as follows:
September (actual) $120 000
October 140 000
November 170 000
December 180 000
January 100 000
(c) Sales are 20% for cash and 80% on credit. All payments on credit sales are collected in
the month following the sale. The
September credit sales.
(a) The company’s gross profit rate is 40% of sales. The cost of goods sold is 60% of sales.
(b) Monthly expenses are budgeted as follows: salaries and wages, $15 000 per month,
shipping 6% of sales, advertising $12 000 per month, other expenses 4% of sales,
(c) At the end of each month, inventory is to be on hand equal 30% of the following month’s
cost of goods sold.
(d) Half of the month’s inventory purchases are paid for in the month of purchase and half in
the following month.
(e) Equipment purchases during the quarter will be as follows: October $23 000 and
November $6 000. Dividends totalling $6 000 will be paid in December.
Required:
Prepare the
December 31, 2005
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