Master Budget Project Summer Session

BUSA202
MASTER BUDGET PROJECT SUMMER SESSION II 2022 Data: Forester Company, a camping gear merchandising firm, prepares its master budget on a quarterly basis. The following data have been assembled to assist in the preparation of the master budget for the third quarter of 2022 . a. On June 30,2022 , the company prepared the following balance sheet: b. Sales for June 2022 weres
$500,000 Master Budget Project Summer Session

 

ORDER A PLAGIARISM-FREE PAPER HERE

. Budgeted sales for July 2022 through October 2022 are as follows: c. Sales are
30%
for cash and
70%
on credit.
50%
of each month’s credit sales are collected in the month of sale and the remaining
50%
is collected in the month after sale; there are no uncollectible accounts anticipated. The accounts receivable balance of
$175,000
on June 30,2022 is the result of June credit sales to be paid in July
($500,000
June sales x
70%
credit sales
×50%
to be collected in the month after sale). d. The company’s budgeted cost of goods sold is
55%
of budgeted sales. e. Monthly expenses are budgeted as follows: salaries and wages,
$50,000
per month plus
20%
of sales; shipping,
2%
of sales; advertising,
$12,500
per month; and depreciation,
$2,500
per month. f. At the end of each month, management desires inventory on hand to be equal to
15% Master Budget Project Summer Session
of the following month’s sales, stated at cost. g. Inventory purchases are all on credit.
40%
of each month’s purchases are paid for in the month of purchase and the remaining
60%
is paid for in the month after purchase. The accounts payable balance of
$110,000
on June 30,2022 is the result of June purchases to be paid in July
$500,000
June sales
×55%
cost of goods sold ratio
×60%
to be paid in the month after sale). h. Land purchases during the quarter will be as follows: July,
$180,000
; September,
$191,008
. i. Dividends totaling
$25,000
will be declared and paid in September. j. The company wants to maintain a minimum cash balance of
$100,000
. An open line of credit is available at a local bank. All borrowing is done at the beginning of the month and all repay-ments of principal are made at the end of a month. Interest is repaid only at the time of repayment of principal and is accrued between the time the borrowing is made and the principal is repaid. The annual interest rate is
12%
and interest is calculated to the nearest whole month (e.g., 1/12,2/12, etc.). Schedule of Cash Disbursements – Inventory Purchases: Schedule of Cash Disbursements – Operating Expenses: In the Financing section, recall that all borrowings are made at the beginning of the month and all principal repayments are made at the end of the month. Interest is only paid for the amount accrued at the time of a principal repayment. However, interest expense and interest payable will need to be recognized in the interim. Master Budget Project Summer Session

× How can I help you?