29 Jun You have just been hired into a management position which requires the application of your budgeting skills.
uestion
Data Scenario:
You have just been hired into a management position which requires the application of your budgeting skills.
You find out that budgeting has not been a priority of the company and that they have been experiencing cash shortages.
You have contacted various areas on the organization and have accumulated the information below to assist you
in preparing a comprehensive budget.
Following is actual information relates to the operations of a merchandiser named Sled Company, a wholesaler of sleds as of March 31.
Cash $7,000
Accounts receivable 15,200
Inventory 22,960
Accounts Payable 22,000
Actual and Budgeted sales dollar Data-Sales Budget:
March (actual) $38,000
April $41,000
May $42,000
June $40,000
July $43,000
Sales are following type: 65% Cash sales collected in month of sale
35% Credit sales collected in the following month of sale
Credit sales are collected in the month following sale. The accounts receivable at March 31 are a result of March credit sales.
Cost of goods sold equals 80% of sales price
At the end of each month, inventory is to be on hand equal to
70% of following month’s sales needs, stated at cost.
Inventory purchases are paid 47% in month of purchase
53% in month after purchase
The accounts payable at March 31 are a result of March purchases of inventory.
Monthly expenses are as follows and are paid in the month incurred if it is a cash expense.
Salaries and wages 13% of sales dollar
Rent $2,500 per month
Other cash expenses 4% of sales dollar
Advertising $1,000 per month
Depreciation $900 for April only
Depreciation $1,000 per the months of May and June
Equipment purchased for cash
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