Purchase Solution

Master Budget

Not what you're looking for?

Ask Custom Question

Victoria Kite Company sells kits on the web wants a master budget for
The next three months beginning January 1, 2008...

1) It desires an ending minimum cash balance of $5,000 each month.

2) Sales forecasted at an average wholesale selling price of $8 per kite.

In January, Victoria Kite is beginning just-in-time (JIT) deliveries from suppliers, which means that purchases equal expected sales

3) On January 1, purchases will cease until inventory reaches $6,000, after which time purchases will equal sales. Merchandise costs average $4 per kite.

4) Purchases during any given month are paid in full during the following month.

5) All sales are on credit, payable within 30 days, but experience has shown that:

60% of current sales are collected in the current month,

30% in the next month, and

10% in the month thereafter. Bad debts are negligible.

6) Monthly operating expenses are as follows:

Wages and salaries $15,000

Insurance expired 125

Depreciation 250

Miscellaneous 2,500

Rent 250/month + 10% of quarterly sales over 10,000

7) Cash dividends of $1,500 are to be paid quarterly, beginning January 15, and are declared on the fifteenth of the previous month.

8) All operating expenses are paid as incurred, except insurance, depreciation, and rent.

9) Rent of $250 is paid at the beginning of each month, and the additional 10% of sales is paid quarterly on the tenth of the month following the end of the quarter.

The next settlement is due January 10.

10) The company plans to buy some new fixtures for $3,000 cash in March.

11) Money can be borrowed and repaid in multiples of $500 at an interest rate of 10% per annum.

Management wants to minimize borrowing and repay rapidly. Interest is computed and paid when the principal is repaid.

11A) Assume that borrowing occurs at the beginning, and repayments at the end of the month s in questions.

12) Assets as of December 31, 2007

Cash $5,000

Accounts receivable 12,500

Inventory * 39,050

Unexpired insurance 1,500

Fixed assets, net 12,500

Total $70,550

13) Liabilities as of December 31, 2007

Accounts payable (merchandise) $35,550

Dividends payable 1,500

Rent payable 7,800

Total $44,850

14) November 30 inventory balance = $16,000

15) Recent and forecasted sales

October $38,000

November $25,000

December $25,000

January $62,000

February $70,000

March $38,000

April $45,000

Required:

(1) Prepare a master budget including a...
Budgeted income statement for the months January through March 2005
Budgeted balance sheet for the months January through March 2005
Budgeted statement of cash receipts and disbursements for the months January through March 2005
Supporting schedules for the months January through March 2005

I am responsible for the schedules/ here is a templates for the schedules needed!

Schedule a: Sales Budget- January February March

Total sales (100% on credit)

Schedule b: Cash Collections

60% of current month's sales

30% of previous month's sales

10% of second previous month's sales

Total collections

Schedule c: Purchases Budget

December January February March

Desired ending inventory

Cost of goods sold

Total needed

Beginning inventory

Purchases

Schedule d: Disbursements for Purchases

100% of previous month's purchases

March 31 accounts payable

If someone can please help me to fill in the numbers to the schedules I would be so grateful!

Purchase this Solution

Solution Summary

The solution explains how to prepare various components of a master budget

Purchase this Solution


Free BrainMass Quizzes
IPOs

This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)

Production and cost theory

Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.

Situational Leadership

This quiz will help you better understand Situational Leadership and its theories.

Income Streams

In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.

Team Development Strategies

This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.