Income Statement and Budgeted Balance Sheet. Crow Enterprises is a merchandising company that is preparing a master budget for the third quarter of the calendar year. The company's balance sheet as of June 30th is shown below: Crow Enterprises Balance Sheet June 30 Assets Cash Accounts receivable $80,000 135,000 41,250 Plant and equipment, net of depreciation_211,000 $ 457,250 Inventory Total assets Liabilities and Stockholders' Equity Accounts payable Common stock $ 72,000 345,000 50,250 Retained earnings Total liabilities and stockholders' equity S 467,250 Crow's managers have made the following additional assumptions and estimates: 1. Estimated sales for July, August, September, and October will be $220,000, $240,000, $230,000, and $250,000, respectively. 2. All sales are on credit and all credit sales are collected. Each month's credit sales are collected 35% in the month of sale and 65% in the month following the sale. All of the accounts receivable at June 30 will be collected in July. 3. Each month's ending inventory must equal 25% of the cost of next month's sales. The cost of goods sold is 75% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts payable at June 30 will be paid in July. 4. Monthly selling and administrative expenses are always $40,000. Each month S6,000 of this total amount is depreciation expense and the remaining $34,000 relates to expenses that are
Income Statement and Budgeted Balance Sheet. Crow Enterprises is a merchandising company that is preparing a master budget for the third quarter of the calendar year. The company's balance sheet as of June 30th is shown below: Crow Enterprises Balance Sheet June 30 Assets Cash Accounts receivable $80,000 135,000 41,250 Plant and equipment, net of depreciation_211,000 $ 457,250 Inventory Total assets Liabilities and Stockholders' Equity Accounts payable Common stock $ 72,000 345,000 50,250 Retained earnings Total liabilities and stockholders' equity S 467,250 Crow's managers have made the following additional assumptions and estimates: 1. Estimated sales for July, August, September, and October will be $220,000, $240,000, $230,000, and $250,000, respectively. 2. All sales are on credit and all credit sales are collected. Each month's credit sales are collected 35% in the month of sale and 65% in the month following the sale. All of the accounts receivable at June 30 will be collected in July. 3. Each month's ending inventory must equal 25% of the cost of next month's sales. The cost of goods sold is 75% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts payable at June 30 will be paid in July. 4. Monthly selling and administrative expenses are always $40,000. Each month S6,000 of this total amount is depreciation expense and the remaining $34,000 relates to expenses that are
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter8: Budgeting
Section: Chapter Questions
Problem 17E
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Concept explainers
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.
Question
Transcribed Image Text:Required:
1. Prepare a schedule of expected cash collections for July, August, and September.
1. Cash Collections for Q3
July
August
September
Q3
From A/R
From July sales
From Aug sales
From Sep sales
Total cash collections
Transcribed Image Text:Schedules of Expected Cash Collections and Disbursements; Budgeted
Income Statement and Budgeted Balance Sheet.
Crow Enterprises is a merchandising company that is preparing a master budget for the third quarter
of the calendar year. The company's balance sheet as of June 30th is shown below:
Crow Enterprises
Balance Sheet
June 30
Assets
$ 80,000
135,000
41,250
Plant and equipment, net of depreciation_211,000
$ 457,250
Cash
Accounts receivable
Inventory
Total assets
Liabilities and Stockholders' Equity
Accounts payable
Common stock
Retained earnings
$ 72,000
345,000
50,250
Total liabilities and stockholders' equity $ 467,250
Crow's managers have made the following additional assumptions and estimates:
1. Estimated sales for July, August, September, and October will be $220,000, $240,000,
$230,000, and $250,000, respectively.
2. All sales are on credit and all credit sales are collected. Each month's credit sales are
collected 35% in the month of sale and 65% in the month following the sale. All of the
accounts receivable at June 30 will be collected in July.
3. Each month's ending inventory must equal 25% of the cost of next month's sales. The cost
of goods sold is 75% of sales. The company pays for 40% of its merchandise purchases in
the month of the purchase and the remaining 60% in the month following the purchase. All of
the accounts payable at June 30 will be paid in July.
4. Monthly selling and administrative expenses are always $40,000. Each month $6,000 of this
total amount is depreciation expense and the remaining $34,000 relates to expenses that are
paid in the month they are incurred.
5. The company does not plan to borrow money or pay or declare dividends during the quarter
ended September 30. The company does not plan to issue any common stock or repurchase
its own stock during the quarter ended September 30.
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