Explore BrainMass

Explore BrainMass

    Master Budget

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    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


    (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


    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!

    © BrainMass Inc. brainmass.com October 9, 2019, 11:51 pm ad1c9bdddf

    Solution Summary

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