The following information on actual and projected costs and revenues is available for Carson Enterprize. Dates Sales Purchases $ $ Oct. 2020 80 000 65 000 Nov. 2020 60 000 45 000 Dec. 2020 90 000 75 000 Jan. 2021 50 000 35 000 Feb. 2021 60 000 45 000 Mar. 2021 70 000 55 000 April 2021 60 000 45 000 You are given the following additional information: i. Based on past analysis, 20% of sales tend to be for cash while the remainder is normally settled as follows: 60% in the month following sales and 40% two months after sale. Carson enterprise normally pays 50% of the cost of purchases in the month of purchase and the remainder in the following month. New equipment will be purchased for $9,000 in January and this will be paid for in equal instalments in January, February and March. Old equipment is expected to be sold for $2,500 in February. Depreciation of the new equipment will be 10% per annum and will be charged to the accounts monthly. Salaries will be $3,000 per month and utilities is expected to be $7,000 in January and is expected to increase by 10% each month after. Selling expenses of 2% of sales will be paid in the month of sale and packing expenses of 3% of purchases will be paid in the month following the purchase date. The firm will obtain a loan of $40,000 in March at an interest rate of 15% per annum. Interest will be paid on an equal monthly basis commencing in March. The balance of cash on January 1, 2021 was $15,000. ii. iii. iv. V. vi. vii. viii. Required: 1. Prepare a schedule of expected sales collections (Sales Budget) for January to April 2021 2. Prepare the Purchases budget for January to April 2021 a. Prepare a cash budget for January to April 2021 3
The following information on actual and projected costs and revenues is available for Carson Enterprize. Dates Sales Purchases $ $ Oct. 2020 80 000 65 000 Nov. 2020 60 000 45 000 Dec. 2020 90 000 75 000 Jan. 2021 50 000 35 000 Feb. 2021 60 000 45 000 Mar. 2021 70 000 55 000 April 2021 60 000 45 000 You are given the following additional information: i. Based on past analysis, 20% of sales tend to be for cash while the remainder is normally settled as follows: 60% in the month following sales and 40% two months after sale. Carson enterprise normally pays 50% of the cost of purchases in the month of purchase and the remainder in the following month. New equipment will be purchased for $9,000 in January and this will be paid for in equal instalments in January, February and March. Old equipment is expected to be sold for $2,500 in February. Depreciation of the new equipment will be 10% per annum and will be charged to the accounts monthly. Salaries will be $3,000 per month and utilities is expected to be $7,000 in January and is expected to increase by 10% each month after. Selling expenses of 2% of sales will be paid in the month of sale and packing expenses of 3% of purchases will be paid in the month following the purchase date. The firm will obtain a loan of $40,000 in March at an interest rate of 15% per annum. Interest will be paid on an equal monthly basis commencing in March. The balance of cash on January 1, 2021 was $15,000. ii. iii. iv. V. vi. vii. viii. Required: 1. Prepare a schedule of expected sales collections (Sales Budget) for January to April 2021 2. Prepare the Purchases budget for January to April 2021 a. Prepare a cash budget for January to April 2021 3
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![[Question]
The following information on actual and projected costs and revenues is available for Carson
Enterprize.
Dates
Sales
Purchases
$
$
Oct. 2020
80 000
65 000
Nov. 2020
60 000
45 000
Dec. 2020
90 000
75 000
Jan. 2021
50 000
35 000
Feb. 2021
60 000
45 000
Mar. 2021
70 000
55 000
April 2021
60 000
45 000
You are given the following additional information:
i.
Based on past analysis, 20% of sales tend to be for cash while the remainder is normally
settled as follows: 60% in the month following sales and 40% two months after sale.
Carson enterprise normally pays 50% of the cost of purchases in the month of purchase
and the remainder in the following month.
New equipment will be purchased for $9,000 in January and this will be paid for in equal
instalments in January, February and March. Old equipment is expected to be sold for
$2,500 in February.
Depreciation of the new equipment will be 10% per annum and will be charged to the
accounts monthly.
Salaries will be $3,000 per month and utilities is expected to be $7,000 in January and is
expected to increase by 10% each month after.
Selling expenses of 2% of sales will be paid in the month of sale and packing expenses of
3% of purchases will be paid in the month following the purchase date.
The firm will obtain a loan of $40,000 in March at an interest rate of 15% per annum.
Interest will be paid on an equal monthly basis commencing in March.
The balance of cash on January 1, 2021 was $15,000.
ii.
iii.
iv.
V.
vi.
vii.
vi11.
Required:
1. Prepare a schedule of expected sales collections (Sales Budget) for January to April 2021
2. Prepare the Purchases budget for January to April 2021
a. Prepare a cash budget for January to April 2021
3](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1cb2edfb-9d78-4fce-b39c-d9a0d22d3df3%2F25971a3d-a73d-4a9b-b4a5-b6848a2f70b5%2Flmlio4k_processed.png&w=3840&q=75)
Transcribed Image Text:[Question]
The following information on actual and projected costs and revenues is available for Carson
Enterprize.
Dates
Sales
Purchases
$
$
Oct. 2020
80 000
65 000
Nov. 2020
60 000
45 000
Dec. 2020
90 000
75 000
Jan. 2021
50 000
35 000
Feb. 2021
60 000
45 000
Mar. 2021
70 000
55 000
April 2021
60 000
45 000
You are given the following additional information:
i.
Based on past analysis, 20% of sales tend to be for cash while the remainder is normally
settled as follows: 60% in the month following sales and 40% two months after sale.
Carson enterprise normally pays 50% of the cost of purchases in the month of purchase
and the remainder in the following month.
New equipment will be purchased for $9,000 in January and this will be paid for in equal
instalments in January, February and March. Old equipment is expected to be sold for
$2,500 in February.
Depreciation of the new equipment will be 10% per annum and will be charged to the
accounts monthly.
Salaries will be $3,000 per month and utilities is expected to be $7,000 in January and is
expected to increase by 10% each month after.
Selling expenses of 2% of sales will be paid in the month of sale and packing expenses of
3% of purchases will be paid in the month following the purchase date.
The firm will obtain a loan of $40,000 in March at an interest rate of 15% per annum.
Interest will be paid on an equal monthly basis commencing in March.
The balance of cash on January 1, 2021 was $15,000.
ii.
iii.
iv.
V.
vi.
vii.
vi11.
Required:
1. Prepare a schedule of expected sales collections (Sales Budget) for January to April 2021
2. Prepare the Purchases budget for January to April 2021
a. Prepare a cash budget for January to April 2021
3
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