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    Operating Budget

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    The following applies to all 3 parts:

    The following information pertains to the January operating budget for Casey Corp -

    Budgeted sales for January $100,000 and February $200,000
    Collections for sales are 60% in the month of sale and 40% the next month
    Gross margin in 30% of sales
    Administrative costs are $10,000 each month
    Beginning accounts receivable $20,000
    Beginning inventory $14,000
    Beginning accounts payable $60,000 (all from inventory purchases)
    Purchases are paid in full the following month
    Desired ending inventory is 20% of next month's cost of goods sold (COGS)

    1) For January, budgeted cash collections are _________.

    $20,000, $60,000, $80,000, or cannot be determined - please advise answer & why - thanks!

    2) At the end of January, budgeted accounts receivable is _______.

    $20,000, $40,000, $60,000, or cannot be determined - please advise answer & why - thanks!

    3) For January, budgeted cost of goods sold is _______.

    $20,000, $30,000, $40,000, or cannont be determined - please advise answer & why - thanks!

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    Solution Preview

    For the month of January, the budgeted cash collections are $80,000/-. The reason is that the opening accounts receivable are $20,000- which will be collected during the month as well as 60% of the sales this month that is 60% of $100,000. that is $60,000. If we add these we get $80,000/-
    At ...