Which of the following is the starting point for developing themaster budget?
a. The sales budget
b. The cash budget
c. The purchases and cost of goodssold budget
d. The capital expenditure budget
Which of the following perspectivefrom the balanced score card approach focuses on continuing toimprove and create value?
a. Financialperspective
b. Customerperspective
c. Internal processperspective
d. Innovation andlearning perspective
Which of the following is the starting point for developing themaster budget?
a. The sales budget
b. The cash budget
c. The purchases and cost of goodssold budget
d. The capital expenditure budget
Which of the following perspectivefrom the balanced score card approach focuses on continuing toimprove and create value?
a. Financialperspective
b. Customerperspective
c. Internal processperspective
d. Innovation andlearning perspective
Related questions
Which of the following budgets is prepared before thepreparation of the production budget?
a. | Sales budget |
b. | Cash budget |
c. | Direct labor budget |
d. | Capital expenditure budget |
2. Which of the following budgets must managers preparebefore they can prepare a direct materials purchases budget?
a. | Labor budget |
b. | Overhead budget |
c. | Production budget |
d. | Cost of goods manufactured budget |
3. Purchases of buildings and equipment are formallyplanned in the
a. | depreciation budget. |
b. | budgeted balance sheet. |
c. | selling and administrative expense budget. |
d. | capital expenditures budget. |
Gibson Company is a retail company that specializes in selling outdoor camping equipment. The company is considering opening a new store on October 1, 2019. The company president formed a planning committee to prepare a master budget for the first three months of operation. As budget coordinator, you have been assigned the following tasks:
a. October sales are estimated to be $320,000, of which 45 percent will be cash and 55 percent will be credit. The company expects sales to increase at the rate of 20 percent per month. Prepare a sales budget.
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b. The company expects to collect 100 percent of the accounts receivable generated by credit sales in the month following the sale. Prepare a schedule of cash receipts.
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c. The cost of goods sold is 70 percent of sales. The company desires to maintain a minimum ending inventory equal to 20 percent of the next monthâs cost of goods sold. However, ending inventory of December is expected to be $12,700. Assume that all purchases are made on account. Prepare an inventory purchases budget.
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d. The company pays 80 percent of accounts payable in the month of purchase and the remaining 20 percent in the following month. Prepare a cash payments budget for inventory purchases. (Round your final answers to the nearest whole dollar amounts.)
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e. Budgeted selling and administrative expenses per month follow:
| Salary expense (fixed) | $ | 18,700 | ||||||||||||||||||||||||||||||||||||||||||||
| Sales commissions | 4 | % of Sales | ||||||||||||||||||||||||||||||||||||||||||||
| Supplies expense | 2 | % of Sales | ||||||||||||||||||||||||||||||||||||||||||||
| Utilities (fixed) | $ | 2,100 | ||||||||||||||||||||||||||||||||||||||||||||
| Depreciation on store fixtures (fixed)* | $ | 4,700 | ||||||||||||||||||||||||||||||||||||||||||||
| Rent (fixed) | $ | 5,500 | ||||||||||||||||||||||||||||||||||||||||||||
| Miscellaneous (fixed) | $ | 1,900 | ||||||||||||||||||||||||||||||||||||||||||||
| *The capital expenditures budget indicates that Gibson will spend $139,800 on October 1 for store fixtures, which are expected to have a $27,000 salvage value and a two-year (24-month) useful life. Prepare a selling and administrative expenses budget using the information listed in E
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f. Utilities and sales commissions are paid the month after they are incurred; all other expenses are paid in the month in which they are incurred. Prepare a cash payments budget for selling and administrative expenses.
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g. Gibson borrows funds, in increments of $1,000, and repays them on the last day of the month. Repayments may be made in any amount available. The company also pays its vendors on the last day of the month. It pays interest of 2 percent per month in cash on the last day of the month. To be prudent, the company desires to maintain a $19,000 cash cushion. Prepare a cash budget. (Any repayments/shortage which should be indicated with a minus sign.)
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h. Prepare a pro forma income statement for the quarter.
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i. Prepare a pro forma balance sheet at the end of the quarter. (Amounts to be deducted should be indicated by a minus sign.)
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j. Prepare a pro forma statement of cash flows for the quarter. (Amounts to be deducted should be indicated by a minus sign.)
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