Question

To illustrate the budgeting process we will use as an example the ABC company as follows
Given data
1. The budgeted period:-July-Sep. 20-- for 3 months
2. The actual balance sheet. June 30th .20-- is shown below
ABC Company
Balance sheet
June 30th .20---
Assets liability & capital
Cash 20,000 Account payable (loan) 16,000
A/R 12,000 Wages payable 3,000
Inventory 16,000 Commission payable 600
Prepaid insur 10,000 Owners equity 54,400
Equipment 30,000
Acc. Depre (14,000)
Total 74,000 Liabilities & Capital 74,000
1. All sales are made 60% on account & 40% on cash. The credit sales are entirely collected the following month of sales
2. Cost of goods sold is estimated at 65% of sales & ending inventory of $ 40,000 is desired at the end of any month
3. Purchases are made 60% on account & 40% on cash. The credit purchases are paid in the following month of purchase
4. Sales men commission are estimated to be 10% of sales
5. Cost equipment & insurance expire at a rate of 20% on book value per month
6. Payments for wages and commission are made 70% in the month and 30% in the following month
7. Minimum cash balance of $ 20,000 is required at the end of any month
8. Money can be borrowed at 9% interst borrowing are made at the begin & repayments are end of months on FIFO based in multiple of $ 2,000
9. The organization has plan to purchase a new equipment in the first half of August for $ 10,000 that will be used expenditure to acquired fixed asset
Forecast for wages and sales are as follows
July August September
Sales 20000 100000 18000
Wages 6000 4000 4000
Required: prepared a master budget for three months ending sep 30. 2011
A. Sales budget
B. Collection from sales
C. Purchase budget
D. Disbursements for purchase doc.

Answer 1

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Answer 2

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Explanation:

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