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 4. What is the projected balance in inventory on December 31, 2016? 5. What are budgeted purchases for December? 6. What is the projected balance in accounts payable on December 31, 2016?
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 4. What is the projected balance in inventory on December 31, 2016? 5. What are budgeted purchases for December? 6. What is the projected balance in accounts payable on December 31, 2016?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
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 |
$216,000 | |||||
Goldberg Company's |
||||||
GOLDBERG COMPANY | ||||||
Statement of Financial Position | ||||||
November 30, 2016 | ||||||
Assets | ||||||
Cash | $30,000 | |||||
|
$76,000 | |||||
Inventory | $132,000 | |||||
Property, plant, and equipment (net of $680,000 |
$870,000 | |||||
Total assets | $1,108,000 | |||||
Liabilities and |
||||||
Accounts payable | $162,000 | |||||
Common stock | $800,000 | |||||
|
$146,000 | |||||
Total liabilities and equity | $1,108,000 | |||||
Requirements | ||||||
4. What is the projected balance in inventory on December 31, 2016? | ||||||
5. What are budgeted purchases for December? | ||||||
6. What is the projected balance in accounts payable on December 31, 2016? |
Expert Solution
Introduction
Budget includes estimated sales, purchases, production, expenditure, and cash flow position. Budget facilitates decision making such as; inventory levels to be maintained, cash to be maintained, or capital expenditure to be incurred in the budgeted period.
Step by step
Solved in 2 steps with 3 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education