Required information TES-824 Inc. is a retailer. Its accountants are preparing the company's 2nd quarter master budget. The company has the following balance sheet as of March 31 Assets Cash Accounts receivable Inventory TES-824 Inc. Balance Sheet March 31 Plant and equipment, net of depreciation Total assets Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings Total liabilities and stockholders equity $ 92,000 130,000 45,600 216,000 $ 456,600 $ 77,000 329,000 50,000 $ 456,600 TES-824 accountants have made the following estimates: 1. Sales for April, May, June, and July will be $270,000, $290,000, $280,000, and $300,000, respectively. 2. All sales are on credit. Each month's credit sales are collected 35% in the month of sale and 65% in the month following the sale. All of the accounts receivabl at March 31 will be collected in April 3. Each month's ending inventory must equal 30% of next month's cost of goods sold. The cost of goods sold is 60% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts payable at March 3t are related to previous merchandise purchases and will be paid in April 4. Monthly selling and administrative expenses are always $50,000 Each month $5,000 of this total amount is depreciation expense and the remaining $45,00m is spent for expenses that are paid in the month they are incurred. 5. The company will not borrow money or pay or declare dividends during the 2nd quarter. The company will not issue any common stock or repurchase its own stock during the 2nd quarter.
Required information TES-824 Inc. is a retailer. Its accountants are preparing the company's 2nd quarter master budget. The company has the following balance sheet as of March 31 Assets Cash Accounts receivable Inventory TES-824 Inc. Balance Sheet March 31 Plant and equipment, net of depreciation Total assets Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings Total liabilities and stockholders equity $ 92,000 130,000 45,600 216,000 $ 456,600 $ 77,000 329,000 50,000 $ 456,600 TES-824 accountants have made the following estimates: 1. Sales for April, May, June, and July will be $270,000, $290,000, $280,000, and $300,000, respectively. 2. All sales are on credit. Each month's credit sales are collected 35% in the month of sale and 65% in the month following the sale. All of the accounts receivabl at March 31 will be collected in April 3. Each month's ending inventory must equal 30% of next month's cost of goods sold. The cost of goods sold is 60% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts payable at March 3t are related to previous merchandise purchases and will be paid in April 4. Monthly selling and administrative expenses are always $50,000 Each month $5,000 of this total amount is depreciation expense and the remaining $45,00m is spent for expenses that are paid in the month they are incurred. 5. The company will not borrow money or pay or declare dividends during the 2nd quarter. The company will not issue any common stock or repurchase its own stock during the 2nd quarter.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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.
Question
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Transcribed Image Text:How much is the company's expected merchandise purchases in the month of June?
Multiple Choice
O
$165,600
$171,600
$222,000
$172,200
Transcribed Image Text:Required information
TES-824 Inc. is a retailer. Its accountants are preparing the company's 2nd quarter master budget. The company has the
following balance sheet as of March 31.
Assets
Cash
TES-824 Inc.
balance sheet
March 31
Accounts receivable
Inventory
Plant and equipment, net of depreciation
Total assets
Liabilities and Stockholders' Equity
Accounts payable
Common stock
Retained earnings
Total liabilities and stockholders' equity
$92,000
130,000
48,600
216,000
$ 456,600
$ 77,000
329,000
50,000
$ 456,600
TES-824 accountants have made the following estimates:
1. Sales for April, May, June, and July will be $270,000, $290,000, $280,000, and $300,000, respectively.
2. All sales are on credit. Each month's credit sales are collected 35% in the month of sale and 65% in the month following the sale. All of the accounts receivable
at March 31 will be collected in April.
3. Each month's ending inventory must equal 30% of next month's cost of goods sold. The cost of goods sold is 60% of sales. The company pays for 40% of its
merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts payable at March 31 are
related to previous merchandise purchases and will be paid in April.
4. Monthly selling and administrative expenses are always $50.000. Each month $5,000 of this total amount is depreciation expense and the remaining $45,000
is spent for expenses that are paid in the month they are incurred.
5. The company will not borrow money or pay or declare dividends during the 2nd quarter. The company will not issue any common stock or repurchase its own
stock during the 2nd quarter
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