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LESSON 14-1

LESSON 14-1. Budget Planning. BUDGET FUNCTIONS. page 413. Planning Operational control Department coordination. BUDGET PERIOD. page 413. Long-range budget Annual budget Quarterly budget Monthly budget. SOURCES OF BUDGET INFORMATION. page 414. Company records

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LESSON 14-1

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  1. LESSON 14-1 Budget Planning

  2. BUDGET FUNCTIONS page 413 • Planning • Operational control • Department coordination LESSON 14-1

  3. BUDGET PERIOD page 413 • Long-range budget • Annual budget • Quarterly budget • Monthly budget LESSON 14-1

  4. SOURCES OF BUDGET INFORMATION page 414 • Company records • General economic information • Company staff and managers • Good judgment LESSON 14-1

  5. COMPARATIVE INCOME STATEMENT page 415 LESSON 14-1

  6. INTERPRETING THE COMPARATIVE INCOME STATEMENT page 416 LESSON 14-1

  7. TERMS REVIEW page 417 • budgeting • budget • budget period • comparative income statement LESSON 14-1

  8. LESSON 14-2 Budgeted Income Statement

  9. 2 1 3 4 6 5 SALES BUDGET SCHEDULE page 419 1. Enter actual and projected units. 2. Determine sales percentages. 3. Calculate unit sales volume. 4. Enter unit sales prices. 5. Calculate projected net sales. 6. Calculate total net sales. LESSON 14-2

  10. 4 6 1 2 7 3 5 PURCHASES BUDGET SCHEDULE page 420 1. Calculate ending inventory for each quarter. 5. Determine purchases. 2. Enter projected unit sales. 6. Enter unit cost. 3. Determine total units needed. 7. Determine cost of purchases. 4. Enter beginning inventory. LESSON 14-2

  11. SELLING EXPENSES BUDGET SCHEDULE page 421 LESSON 14-2

  12. ADMINISTRATIVE EXPENSESBUDGET SCHEDULE page 423 LESSON 14-2

  13. OTHER REVENUE AND EXPENSES BUDGET SCHEDULE page 424 LESSON 14-2

  14. 1 2 BUDGETED INCOME STATEMENT page 425 1. Beginning inventory: 39,200 units  $3.30 = $129,360 2. Ending inventory: 42,100 units  $3.40 = $143,140 LESSON 14-2

  15. Net Income before Federal Income Tax Federal IncomeTax Expense  Tax Rate =  $125,970 39% less $16,750 = $32,378.30rounded to $32,380 CALCULATING FEDERAL INCOME TAX EXPENSE page 425 Calculating Federal Income Tax Expense 15% of net income before taxes, zero to $50,000.00. 25% of net income before taxes less $5,000.00, $50,001.00 to $75,000.00. 34% of net income before taxes less $11,750.00, $75,001.00 to $100,000.00. 39% of net income before taxes less $16,750.00, $100,001.00 to $335,000.00. LESSON 14-2

  16. TERMS REVIEW page 426 • sales budget schedule • purchases budget schedule • selling expenses budget schedule • administrative expenses budget schedule • other revenue and expenses budget schedule • budgeted income statement LESSON 14-2

  17. LESSON 14-3 Cash Budgets and Performance Reports

  18. 1 2 Collection Percentage First QuarterNet Sales Second QuarterCash Receipts  = 1  $488,000 $94,672, rounded to $94,670 19.4% = Collection Percentage Second Quarter Sales Second QuarterCash Receipts  = 2  $552,300 $441,840 80.0% = CASH RECEIPTS BUDGET SCHEDULE page 427 LESSON 14-3

  19. CASH PAYMENTS BUDGET SCHEDULE page 429 LESSON 14-3

  20. CASH BUDGET page 430 LESSON 14-3

  21. PERFORMANCE REPORT page 431 LESSON 14-3

  22. PERFORMANCE REPORT page 431 LESSON 14-3

  23. TERMS REVIEW page 433 • cash receipts budget schedule • cash payments budget schedule • cash budget • performance report LESSON 14-3

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