Required information KAB Inc., a small retail store, had the following results for May. The budgets for June and July are also given. Sales Cost of sales Gross margin Operating expenses Operating income May (actual) $45,000 $20,000 $25,000 $19,000 $5,000 June (budget) $46,000 $21.000 $21,000 $19,000 $1,000 July (budget) $49,000 $23,500 $21,500 $19,000 $1,500 Sales are collected 75% in the month of the sale and the balance in the month following the sale. (There are no bad debts.) The goods that are sold are purchased in the month prior to sale. Suppliers of the goods are paid in the month following the purchase. The operating expenses are paid in the month of the sale.
Required information KAB Inc., a small retail store, had the following results for May. The budgets for June and July are also given. Sales Cost of sales Gross margin Operating expenses Operating income May (actual) $45,000 $20,000 $25,000 $19,000 $5,000 June (budget) $46,000 $21.000 $21,000 $19,000 $1,000 July (budget) $49,000 $23,500 $21,500 $19,000 $1,500 Sales are collected 75% in the month of the sale and the balance in the month following the sale. (There are no bad debts.) The goods that are sold are purchased in the month prior to sale. Suppliers of the goods are paid in the month following the purchase. The operating expenses are paid in the month of the sale.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
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Transcribed Image Text:Required information
KAB Inc., a small retail store, had the following results for May. The budgets for June and July are also given.
Sales
Cost of sales
Gross margin
Operating
expenses
Operating income
May (actual)
$45,000
$20,000
$25,000
$19,000
$5,000
June (budget)
$46,000
$21,000
$21,000
$19,000
$1,000
July (budget)
$49,000
$23,500
$21,500
$19,000
$1,500
Sales are collected 75% in the month of the sale and the balance in the month following the sale. (There are no bad
debts.) The goods that are sold are purchased in the month prior to sale. Suppliers of the goods are paid in the month
following the purchase. The operating expenses are paid in the month of the sale.
part 2:
What should be the amount of cash collected during the month of June?
What should be the cash disbursements during the month of June for goods purchased for resale and for operating expenses?
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