Problem 10-49: Budgeting for a Merchandising Firm Background Budgeted sales: December $250,000 January $225,000 Collections of A/R: Collected in month of sale 50.00% Collected following month 48.00% Est B/D expense 2.00% Discount for early payment 1.00% Gross margin % 30% Target End Inv, as % of following month's sales 80.00% Merchandise payments: % paid in month following month of purchase 100.00% Other operating expenses (cash) = $25,000 Annual depreciation expense = $216,000 Goldberg Company's statement of financial position at the close of business on November 30th follows: GOLDBERG COMPANY Statement of Financial Position November 30, 2016 Assets Cash $30,000 Accounts receivable (net of $4,000 allowance for doubtful accounts) $76,000 Inventory $132,000 Property, plant, and equipment (net of $680,000 accumulated depreciation) $870,000 Total assets $1,108,000 Liabilities and Stockholders' Equity Accounts payable $162,000 Common stock $800,000 Retained earnings $146,000 Total liabilities and equity $1,108,000 Requirements 1. What is the total of budgeted cash collections for December? 2. How much is the book value of accounts receivable at the end of December? 3. How much is the income (loss) before income taxes for December?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Problem 10-49: Budgeting for a Merchandising Firm
Background

Budgeted sales:
December		$250,000
January		$225,000
Collections of A/R:
Collected in month of sale	50.00%
Collected following month	48.00%
Est B/D expense	2.00%
Discount for early payment	1.00%
Gross margin %		30%
Target End Inv, as % of following month's sales	80.00%
Merchandise payments:
% paid in month following month of purchase	100.00%
Other operating expenses (cash) =	$25,000
Annual depreciation expense =	$216,000


	Goldberg Company's statement of financial position at the close of business on November 30th follows:

	GOLDBERG COMPANY
	Statement of Financial Position
	November 30, 2016

	Assets
	Cash			$30,000
	Accounts receivable (net of $4,000 allowance for doubtful accounts)		$76,000
	Inventory			$132,000
	Property, plant, and equipment (net of $680,000 accumulated depreciation)		$870,000
	Total assets			$1,108,000

	Liabilities and Stockholders' Equity
	Accounts payable			$162,000
	Common stock			$800,000
	Retained earnings			$146,000
	Total liabilities and equity			$1,108,000


Requirements

1. What is the total of budgeted cash collections for December?
2. How much is the book value of accounts receivable at the end of December?
3. How much is the income (loss) before income taxes for December?

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