Vinning Office Supply
Balance Sheet 31-Mar-16 Assets
Current Assets:
Cash $23,000 Accounts Receivable
22,000 MerchandiseInventory 30,500 Prepaid Insurance 1,400 Total Current Assets
$76,900 Property, Plant, andEquipment: Equipment andFixtures 42,000 Less: Accumulated Depreciation
-20,000 22,000 Total Assets $98,900
a.
Sales in April are expectedto be $180,000. Vinning forecasts that monthly sales willincreaseâ2% over April sales in May. Juneâ's sales will increasebyâ 4% over April sales. July sales will increaseâ 20% over Aprilsales. Cash receipts are 60â% in the month of the sale and 40â% inthe month following the sale. b.
Vinning maintains inventory of $8,000 plusâ 25% of thecost of goods sold budgeted for the following month. Cost of goodssold equalâ 50% of sales revenue. Purchases are paid 70â% in themonth of purchase and 30â% in the month following thepurchase.
c.
Monthly salaries amount to$8,000. Sales commissions equalâ 5% of sales for that month.Salaries and commissions are paid 40â% in the month incurred and60â% in the following month. d.
Other monthly expenses are asâ follows: ⢠Rent: $3,000â,paid as incurred ⢠âDepreciation: $500 ⢠âInsurance: $100â,expiration of prepaid amount ⢠Incomeâ tax: $2,400â, paid asincurred
Vinning Officeâ Supply's March 31â, 2016â,
balance sheetâ follows: The budget committee of VinningOffice Supply has assembled the followingâ data:
Requirement 1. Prepare Vinningâ's sales budget forApril and May 2016.
Round all amounts to the nearest dollar.
Vinning Office Supply
Sales Budget
April and May, 2016
April
May
Total budgeted sales
$180,000
$183,600
Requirement 2. Prepare
VinningVinningâ's
âinventory, purchases, and cost of goods sold budget for
AprilApril
and
MayMay.
Vinning Supply Company
Inventory, Purchases, and Cost of Goods SoldBudget
April and May, 2016
April
May
Cost of goods sold
$90,000
$91,800
Plus:
Desired ending merchandise inventory
30,950
31,400
Total merchandise inventory required
120,950
123,200
Less:
Beginning merchandise inventory
30,500
30,950
Budgeted Purchases
$90,450
$92,250
Requirement 3. Prepare
VinningVinningâ's
selling and administrative expense budget for
AprilApril
and
MayMay.
Vinning Office Supply
Selling and Administrative Expense Budget
April and May, 2016
April
May
Variable expenses:
Commissions Expense
Fixed expenses:
Salaries Expense
Rent Expense
Depreciation Expense
Insurance Expense
Total fixed expenses
Total selling and administrative expenses
Vinning Office Supply | ||
| Balance Sheet | ||
| 31-Mar-16 | ||
Assets | ||
Current Assets: | ||
| Cash | $23,000 | |
Accounts Receivable | 22,000 | |
| MerchandiseInventory | 30,500 | |
| Prepaid Insurance | 1,400 | |
Total Current Assets | $76,900 | |
| Property, Plant, andEquipment: | ||
| Equipment andFixtures | 42,000 | |
Less: Accumulated Depreciation | -20,000 | 22,000 |
| Total Assets | $98,900 |
a. | Sales in April are expectedto be $180,000. Vinning forecasts that monthly sales willincreaseâ2% over April sales in May. Juneâ's sales will increasebyâ 4% over April sales. July sales will increaseâ 20% over Aprilsales. Cash receipts are 60â% in the month of the sale and 40â% inthe month following the sale. |
b. | Vinning maintains inventory of $8,000 plusâ 25% of thecost of goods sold budgeted for the following month. Cost of goodssold equalâ 50% of sales revenue. Purchases are paid 70â% in themonth of purchase and 30â% in the month following thepurchase. |
c. | Monthly salaries amount to$8,000. Sales commissions equalâ 5% of sales for that month.Salaries and commissions are paid 40â% in the month incurred and60â% in the following month. |
d. | Other monthly expenses are asâ follows: ⢠Rent: $3,000â,paid as incurred ⢠âDepreciation: $500 ⢠âInsurance: $100â,expiration of prepaid amount ⢠Incomeâ tax: $2,400â, paid asincurred |
Vinning Officeâ Supply's March 31â, 2016â,
balance sheetâ follows: The budget committee of VinningOffice Supply has assembled the followingâ data:
Requirement 1. Prepare Vinningâ's sales budget forApril and May 2016.
Round all amounts to the nearest dollar.
Vinning Office Supply | |||
Sales Budget | |||
April and May, 2016 | |||
April | May | ||
Total budgeted sales | $180,000 | $183,600 | |
Requirement 2. Prepare
VinningVinningâ's
âinventory, purchases, and cost of goods sold budget for
AprilApril
and
MayMay.
Vinning Supply Company | |||
Inventory, Purchases, and Cost of Goods SoldBudget | |||
April and May, 2016 | |||
April | May | ||
Cost of goods sold | $90,000 | $91,800 | |
Plus: | Desired ending merchandise inventory | 30,950 | 31,400 |
Total merchandise inventory required | 120,950 | 123,200 | |
Less: | Beginning merchandise inventory | 30,500 | 30,950 |
Budgeted Purchases | $90,450 | $92,250 | |
Requirement 3. Prepare
VinningVinningâ's
selling and administrative expense budget for
AprilApril
and
MayMay.
Vinning Office Supply | |||
Selling and Administrative Expense Budget | |||
April and May, 2016 | |||
April | May | ||
Variable expenses: | |||
Commissions Expense | |||
Fixed expenses: | |||
Salaries Expense | |||
Rent Expense | |||
Depreciation Expense | |||
Insurance Expense | |||
Total fixed expenses | |||
Total selling and administrative expenses | |||
Related questions
The following data relate to the operations of Shilow Company, awholesale distributor of consumer goods:
| Current assets as ofMarch 31: | ||
| Cash | $ | 8,500 |
| Accounts receivable | $ | 24,000 |
| Inventory | $ | 45,600 |
| Building and equipment, net | $ | 121,200 |
| Accounts payable | $ | 27,300 |
| Common stock | $ | 150,000 |
| Retained earnings | $ | 22,000 |
The gross margin is 25% of sales.
Actual and budgeted sales data:
| March (actual) | $ | 60,000 |
| April | $ | 76,000 |
| May | $ | 81,000 |
| June | $ | 106,000 |
| July | $ | 57,000 |
Sales are 60% for cash and 40% on credit. Credit sales arecollected in the month following sale. The accounts receivable atMarch 31 are a result of March credit sales.
Each monthâs ending inventory should equal 80% of the followingmonthâs budgeted cost of goods sold.
One-half of a monthâs inventory purchases is paid for in themonth of purchase; the other half is paid for in the followingmonth. The accounts payable at March 31 are the result of Marchpurchases of inventory.
Monthly expenses are as follows: commissions, 12% of sales;rent, $3,300 per month; other expenses (excluding depreciation), 6%of sales. Assume that these expenses are paid monthly. Depreciationis $909 per month (includes depreciation on new assets).
Equipment costing $2,500 will be purchased for cash inApril.
Management would like to maintain a minimum cash balance of atleast $4,000 at the end of each month. The company has an agreementwith a local bank that allows the company to borrow in incrementsof $1,000 at the beginning of each month, up to a total loanbalance of $20,000. The interest rate on these loans is 1% permonth and for simplicity we will assume that interest is notcompounded. The company would, as far as it is able, repay the loanplus accumulated interest at the end of the quarter.
Required:
Using the preceding data:
1. Complete the following schedule:
2. Complete the following:
3. Complete the following cash budget:
4. Prepare an absorption costing income statement for thequarter ended June 30.
5. Prepare a balance sheet as of June 30.
Complete the following schedule:
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Complete the following:
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Complete the following cash budget: (Cash deficiency, repaymentsand interest should be indicated by a minus sign.)
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Prepare an absorption costing income statement for the quarterended June 30.
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Prepare a balance sheet as of June 30.
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The following data relate to the operations of Shilow Company, awholesale distributor of consumer goods:
| Current assets as ofMarch 31: | ||
| Cash | $ | 8,500 |
| Accounts receivable | $ | 24,000 |
| Inventory | $ | 45,600 |
| Building and equipment, net | $ | 121,200 |
| Accounts payable | $ | 27,300 |
| Common stock | $ | 150,000 |
| Retained earnings | $ | 22,000 |
The gross margin is 25% of sales.
Actual and budgeted sales data:
| March (actual) | $ | 60,000 |
| April | $ | 76,000 |
| May | $ | 81,000 |
| June | $ | 106,000 |
| July | $ | 57,000 |
Sales are 60% for cash and 40% on credit. Credit sales arecollected in the month following sale. The accounts receivable atMarch 31 are a result of March credit sales.
Each monthâs ending inventory should equal 80% of the followingmonthâs budgeted cost of goods sold.
One-half of a monthâs inventory purchases is paid for in themonth of purchase; the other half is paid for in the followingmonth. The accounts payable at March 31 are the result of Marchpurchases of inventory.
Monthly expenses are as follows: commissions, 12% of sales;rent, $3,300 per month; other expenses (excluding depreciation), 6%of sales. Assume that these expenses are paid monthly. Depreciationis $909 per month (includes depreciation on new assets).
Equipment costing $2,500 will be purchased for cash inApril.
Management would like to maintain a minimum cash balance of atleast $4,000 at the end of each month. The company has an agreementwith a local bank that allows the company to borrow in incrementsof $1,000 at the beginning of each month, up to a total loanbalance of $20,000. The interest rate on these loans is 1% permonth and for simplicity we will assume that interest is notcompounded. The company would, as far as it is able, repay the loanplus accumulated interest at the end of the quarter.
Required:
Using the preceding data:
1. Complete the following schedule:
2. Complete the following:
3. Complete the following cash budget:
4. Prepare an absorption costing income statement for thequarter ended June 30.
5. Prepare a balance sheet as of June 30.
Complete the following schedule:
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Complete the following:
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Complete the following cash budget: (Cash deficiency, repaymentsand interest should be indicated by a minus sign.)
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Prepare an absorption costing income statement for the quarterended June 30.
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Prepare a balance sheet as of June 30.
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