Chapter 5 – Planning and Forecasting
5-77
5-40, continued
Inventory Purchases Budget
July
August
September
Quarter
October
Budgeted unit sales
4,500
4,700
4,600
13,800
4,600
+
Budgeted ending inventorya
1,175
1,150
1,150
1,150
=
Total materials required
5,675
5,850
5,750
14,950
–
Beginning inventory
1,125
1,175
1,150
1,125
=
Budgeted purchases
4,550
4,675
4,600
13,825
×
Cost per unit
$146
$146
$146
$146
=
Budgeted purchases cost
$664,300
$682,550
$671,600
$2,018,450
Ending Inventory Budget
Beginning balance
$164,250
Inventory purchases
Less: Ending inventory (1,150 $146)
Cost of goods sold
5-78
5-40, continued
Cash Receipts Budget
July
August
September
Total
Cash Receipts
Bad Debts
Accounts
Receivable
June A/R
$180,000
$180,000
July sales
$1,012,500 × 41%
415,125
415,125
$1,012,500 × 35%
354,375
354,375
$1,012,500 × 20%
$202,500
202,500
$1,012,500 × 4%
$40,500
August sales
$1,057,500 × 41%
433,575
433,575
$1,057,500 × 35%
370,125
370,125
$1,057,500 × 20%
$211,500
211,500
$1,057,500 × 4%
42,300
September sales
$1,035,000 × 41%
424,350
424,350
$1,035,000 × 35%
362,250
362,250
$1,035,000 × 4%
41,400
$1,035,000 × 20%
$207,000
Totals
$949,500
$1,006,200
$998,100
$2,953,800
$124,200
$207,000
Chapter 5 – Planning and Forecasting
5-79
5-40, continued
Cash Payments for Inventory Budget
July
August
September
Total Cash
Payments
Accounts
Payable
June A/P
$175,000
$175,000
July purchases
$664,300 × 70%
465,010
465,010
$664,300 × 30%
$199,290
199,290
August purchases
$682,550 × 70%
477,785
477,785
$682,550 × 30%
$204,765
204,765
September purchases
$671,600 × 70%
470,120
470,120
$671,600 × 30%
$201,480
Totals
$640,010
$677,075
$674,885
$1,991,970
$201,480
5-80
5-40, continued
Cash Budget
July
August
September
Quarter
Beginning cash balance
$21,000
$20,490
$20,835
$21,000
Collections from sales
949,500
1,006,200
998,100
2,953,800
Total cash available to spend
970,500
1,026,690
1,018,935
2,974,800
Less disbursements
Inventory purchases
640,010
677,075
674,885
1,991,970
Selling & administrative expenses
274,000
304,000
274,000
852,000
Accrued expenses
75,000
75,000
Equipment purchase
45,000
45,000
Total disbursements
989,010
981,075
993,885
2,963,970
Cash excess (deficiency)
(18,510)
45,615
25,050
10,830
Minimum cash balance
20,000
20,000
20,000
20,000
Cash excess (needed)
(38,510)
25,615
5,050
(9,170)
Financing:
Borrowings
39,000
39,000
Repaymentsb
(24,000)
(4,000)
(28,000)
Interesta
(780)
(150)
(930)
Total financing
39,000
(24,780)
(4,150)
10,070
Ending cash balance
$20,490
$20,835
$20,900
$20,900
a August interest = $39,000 × 12% × 2
12 = $780
September interest = ($39,000 – $24,000) × 12% × 1
12 = $150
b August repayment = $25,615 – $780 = $24,835, rounded down to $24,000
September repayment = $5,050 – $150 = $4,900, rounded down to $4,000
Chapter 5 – Planning and Forecasting
5-81
5-40, continued
b.
Income Statement for the quarter ended September 30
Sales
$3,105,000
Cost of goods sold
2,014,800
Gross profit
1,090,200
Selling and administrative expense
1,003,200
Operating income
87,000
Interest expense
930
Income before taxes
86,070
Income tax expense (30%)
25,821
Net income
$60,249
c.
Balance Sheet as of 9/30
Cash
$20,900
A/R
207,000
Inventory
167,900
Property, Plant & Equipmenta
585,000
Less: Accumulated Depreciationb
(162,000)
Total Assets
$818,800
A/P
$201,480
Income Taxes Payable
25,821
Note Payablec
11,000
Common Stock
300,000
Retained Earningsd
280,499
Total Liabilities and Equities
$818,800
a $540,000 + $45,000
b $135,000 + $27,000
c $39,000 borrowed – $28,000 repaid
d $220,250 + $60,249
5-82
Case 5-41
budgeted amount.
b. There is no indication that Mayfield expects that budgetary padding is
franchised store in the region in 2015.
Duvall has much to lose from his actions. Falsifying information is a
d. As a certified management accountant, Duvall is bound to abide by