Sipan Retail Company was recently created with a beginning cash balance of $12,000. The owner expects the following for the first month of operations: Cash sales to customers $8,000 Sales on account to customers $30,000 Cash collected from account customers $12,000 Cost of merchandise purchased $35,000 Cash paid for merchandise purchased $24,500 Cost of merchandise sold $26,600 Cash paid for display cases $9,600 Selling and administrative expenses $4,000 The display cases above were purchased at the beginning of the month and are being depreciated at a rate of $200 per month. This amount is included in the selling and administrative expenses figure above. All other selling and administrative expenses are paid as incurred. Sipan wants to maintain a cash balance of $10,000. Any amount below this can be borrowed from a local bank as needed in increments of $1,000. All borrowings are made at month end. 1) In Sipan's cash budget for this first month, how much money will Sipan need to borrow at month end? A) $7,000 B) $16,000 C) $17,000 D) $28,000 2) In Sipan's budgeted income statement for this first month, what will net income (loss) be for this first month? A) $(1,000) B) $(2,000) C) $7,400 D) $9,500 3) In Sipan's budgeted balance sheet at the end of this first month, at what amout will accounts receivable be shown? A) $0 B) $9,600 C) $18,000
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.
Sipan Retail Company was recently created with a beginning cash balance of $12,000. The owner expects the following for the first month of operations:
Cash sales to customers $8,000
Sales on account to customers $30,000
Cash collected from account customers $12,000
Cost of merchandise purchased $35,000
Cash paid for merchandise purchased $24,500
Cost of merchandise sold $26,600
Cash paid for display cases $9,600
Selling and administrative expenses $4,000
The display cases above were purchased at the beginning of the month and are being
1) In Sipan's
A) $7,000
B) $16,000
C) $17,000
D) $28,000
2) In Sipan's
A) $(1,000)
B) $(2,000)
C) $7,400
D) $9,500
3) In Sipan's budgeted
A) $0
B) $9,600
C) $18,000
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