Problem 14-23 Preparing a master budget for retail company with no beginning acc
ID: 2396840 • Letter: P
Question
Problem 14-23 Preparing a master budget for retail company with no beginning account balances LO 14-2, 14-3, 14-4, 14-5, 14-6 [The following information applies to the questions displayed below.] Baird 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: References Problem 14-23 Preparing a master budget for retail company with no beginning account balances LO 14-2, 14 3, 14-4,14-5,14-6 Section BreakExplanation / Answer
Schedule of Cash Receipt :-
October
November
December
Current Cash Sales
(300000 * 40%)
=120000
(300000 * 120%) * 40%
=144000
(360000 * 120%) * 40%
=172800
Plus Collection from A/R
-
(300000 * 60%)
=180000
(360000 * 60%)
=216000
Total Collection
120000
324000
388800
Inventory Purchase Budget :-
October
November
December
Budgeted COGS
(300000 * 70%)
=210000
(360000 * 70%)
=252000
(432000 * 70%)
=302400
Plus Desired Ending Inventory
(252000 * 20%)
=50400
(302400 * 20%)
=60480
12100
Inventory Needed
260400
312480
314500
Less Beginning Inventory
-
50400
60480
Required Purchase (on account)
260400
262080
254020
Cash Payment Budget for Inventory Purchase :-
October
November
December
Payment of current month A/P
(260400 * 80%)
=208320
(262080 * 80%)
=209664
(252020 * 80%)
=201616
Payment for prior month A/P
-
(260400 * 20%)
=52080
(262080 * 20%)
=52416
Total Budgeted Payment for Inventory
208320
261744
254032
Cash Budget :-
October
November
December
Beginning Cash Balance
-
13300
13000
Add Cash Receipts
120000
324000
388800
Cash Available
120000
337300
401800
Less Payments
For Inventory Purchase
208320
261744
254032
For S&A Exp
30300
45000
48840
Purchase of store fixtures
119400
-
-
Interest Exp
-
(163000 * 2%)
=3260
(163000–14296)*2%
=2974
Total Budgeted Paymnets
358020
310004
305846
Payment minus receipts
Surplus (Shortage)
(149700)
27296
95954
Financing activity
Borrowing (repayment)
163000
(14296)
(82954)
Ending cash Balance
13300
13000
13000
Cash Payment for S & A Exp :-
October
November
December
Salary Exp (fixed)
18100
18100
18100
Sales Commission
-
(300000 * 4%)
=12000
(360000 * 4%)
=14400
Supplies Exp
(300000 * 2%)
=6000
(360000 * 2 %)
=7200
(432000 * 2%)
=8640
Utilities (fixed)
-
1500
1500
Rent (Fixed)
4900
4900
4900
Miscellaneous (fixed)
1300
1300
1300
Total Payment for S & A Exp
30300
45000
48840
October
November
December
Current Cash Sales
(300000 * 40%)
=120000
(300000 * 120%) * 40%
=144000
(360000 * 120%) * 40%
=172800
Plus Collection from A/R
-
(300000 * 60%)
=180000
(360000 * 60%)
=216000
Total Collection
120000
324000
388800