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Question
Allan Corporation has a sales budget for March of $440,000. About 10% are cash sales and the remainder is sold on account.
The company expects that 60% of credit sales will be collected in the month of the sale, 25% in the next month and 10% in the following month.
Materials purchased on account are expected to be $250,000. Allan pays 35% in the month of the purchase, 50% in the month following the purchase and the remaining 15% in the second month after the purchase.
Salaries and wages of the workers are approximately $45,000 per month. The employees are paid weekly so on average 95% of their wages are paid in the month to which they relate and the remaining 5% is paid in the following month.
Utilities average $4,300 per month.
Rent on the building is $9,000 per month.
Insurance is $3,000 per month and advertising costs are $1,000 per month.
February sales were $320,000 and purchases of materials in February were $170,000; January sales were $200,000 and purchases of materials in January were $130,000.
The cash balance on March 1st is $5,400.
Required:
A. Prepare a schedule of cash receipts
B. Prepare a schedule of cash payments (Accounts payable payments)
C. Prepare a cash budget
Answer
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u200b
Kooper Co.
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For the Year Ended December 31, Year 1
Revenues: u200b u200b
Net sales u200b $383,000
Less: Cost of goods sold u200b 121,700
Gross margin u200b $261,300
Less Operating expenses: u200b u200b
Selling expenses $41,500 u200b
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Interest expense 12,000 u200b
Total expenses u200b 100,000
Net income u200b $151,300
Kooper Co.
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December 31,Year 1
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Current assets: u200b u200b u200b
Cash u200b $53,000 u200b
Accounts receivable u200b 64,300 u200b
Marketable securities u200b 10,500 u200b
Inventory u200b 93,250 u200b
Total current assets u200b u200b $221,050
Property, plant, and equipment: u200b u200b u200b
Store equipment $325,000 u200b u200b
Less Accumulated depreciation 162,100 $162,900 u200b
Office equipment $149,750 u200b u200b
Less Accumulated depreciation 72,750 77,000 u200b
Total property, plant, and equipment u200b u200b 239,900
Total assets u200b u200b $460,950
Liabilities
Current liabilities: u200b u200b u200b
Accounts payable u200b $97,200 u200b
Salaries payable u200b 28,700 u200b
Total current liabilities u200b u200b $125,900
Long-term liabilities: u200b u200b u200b
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