1 / 15

Chapter 23

Chapter 23. Master Budgets and Planning. Demonstration Problem Data. Demonstration Problem Data. Sales for March total 10,000 units. Each month’s sales are expected to exceed the prior month’s result by 5%. The product’s selling price is $25 per unit.

gregory-pallas
Download Presentation

Chapter 23

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Chapter 23 Master Budgets and Planning

  2. Demonstration Problem Data

  3. Demonstration Problem Data • Sales for March total 10,000 units. Each month’s sales are expected to exceed the prior month’s result by 5%. The product’s selling price is $25 per unit. • Company policy calls for a given month’s ending inventory to equal 80% of the next month’s expected unit sales. The March 31 inventory is 8,400 units, which complies with the policy. The purchase price is $15 per unit. • Sales representatives’ commissions are 12.5% of sales and are paid in the month of the sales. The sales manager’s monthly salary will be $3,500 in April and $4,000 per month thereafter.

  4. Demonstration Problem Data • Monthly general and administrative expenses include $8,000 administrative salaries, $5,000 depreciation, and 0.9% monthly interest on the long-term note payable. • The company expects 30% of sales to be for cash and the remaining 70% on credit. Receivables are collected in full in the month following the sale. (None is collected in the month of the sale.) • All merchandise purchases are on credit, and no payables arise from any other transactions. One month’s purchases are fully paid in the next month. • The minimum ending cash balance for all months is $50,000. If necessary, the company borrows enough cash using a short-term note to reach the minimum. Short-term notes require an interest payment of 1% at each month-end (before any repayment). If the ending cash balance exceeds the minimum, the excess will be applied to repaying the short-term note payable balance.

  5. Demonstration Problem Data • Dividends of $100,000 are to be declared and paid in May. • No cash payments for income taxes are to made during the second calendar quarter. Income taxes will be assess at 35% in the quarter. • Equipment purchases of $55,000 are scheduled for June. After reading all of the above introductory information, we are to prepare a master budget for Wild Wood Company using the information presented in the problem.

  6. Salesbudget MerchandisePurchases • Prepare financials • Income stmt • Retained earnings • Balance sheet Prepareselling andgeneraladministrativebudgets Preparecashbudget Master Budget Components

  7. Sales Budget

  8. Purchases and COGS Budget

  9. Selling Expenses

  10. General and administrative expenses

  11. Components of Cash Budget

  12. Cash Budget

  13. Budgeted Income Statement

  14. Budgeted Retained Earnings

  15. Budgeted Balance Sheet

More Related