Basco, Mary Justine
“Always remember that in budgeting, the
most important task is the enumeration of
assumptions based on sound estimates or
...
a. The company is a retail outlet for a variety of
hardware and home wares.
b. The manager would like to see how the firms...
c. The following data is necessary to prepare
simplified budget where presented below:
 Equipment will be purchased in Ap...
 Interest also is paid in cash at the end of a month at an annual
rate of 12% on the amount of note payable outstanding
d...
 Minimum inventory policy as a % of
next month’s cost of sales is 30%
 Required minimum cash balance 8,000
 Budgeted pe...
 Budgeted Sales mix, as to cash sales and credit sales:
Cash Sales 20%
Credit Sales 80%
Cost of goods sold is at 60%
 Pu...
 Budget balance Sheet as of March 31, current year:
Assets
Cash P9,000
Accounts receivable 48,000
Inventory 12,000
Plant ...
1. Sales Budget
2. Cash Collection
3. Purchases
4. Cash Disbursements
5. Operating expenses and disbursements for
expenses...
April May June Total
Schedule of Sales Budget
Credit sales, 80% 56,000 68,000 72,000 196,000
Cash sales, 20% 14,000 17,000...
April May June Total
Schedule of cash collections
Credit sales 14,000 17,000 18,000 49,000
Collections from prior month 48...
April May June Total
Schedule of purchase budget
Desired ending inventory 15,300 16,200 9,000 40,500
Cost of goods sold 42...
April May June Total
Computation of costs of good sold
at 60% sales
Estimated sales 70,000 85,000 90,000
Multiplied by 60%...
April May June Total
Schedule of Cash disbursements
For purchases:
For March amount from previous
month
18,300 - - 18,300
...
April May June Total
Schedule of Operating Expenses &
Disbursements for expenses except interest
expense:
Cash Expense
Sal...
Beginning cash balance 9,000 8,000 8,000
Cash collections 62,000 73,000 86,000
Total Cash available 71,000 81,000 94,000
C...
Cash Budget April to June
Cash Disbursements
Inventory purchases 40,650 48,300 49,350
Operating expenses 20,500 22,000 22,...
 Business accounting (Comprehensive illustrative format of a Master Budget)
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Business accounting (Comprehensive illustrative format of a Master Budget)

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“Always remember that in budgeting, the most important task is the enumeration of assumptions based on sound estimates or forecasts by the people involved in budgeting process”

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Business accounting (Comprehensive illustrative format of a Master Budget)

  1. 1. Basco, Mary Justine
  2. 2. “Always remember that in budgeting, the most important task is the enumeration of assumptions based on sound estimates or forecasts by the people involved in budgeting process”
  3. 3. a. The company is a retail outlet for a variety of hardware and home wares. b. The manager would like to see how the firms cash position would look line he expects that the firm will have to borrow to finance purchases in anticipation of higher sales.
  4. 4. c. The following data is necessary to prepare simplified budget where presented below:  Equipment will be purchased in April for P19,750 cash  Dividends of P4,000 will be paid in June.  Borrowing occurs at the end of a month when a cash is needed.  Repayments (if appropriate) occur at the end of a month when cash is available.
  5. 5.  Interest also is paid in cash at the end of a month at an annual rate of 12% on the amount of note payable outstanding during that month.  Additional data were available: Budgeted expense (per month) • Wages and salaries P7,500 • Freight out as % of sales 6% • Advertising P6,000 • Depreciation P2,000 • Other expenses as % of sales 4%
  6. 6.  Minimum inventory policy as a % of next month’s cost of sales is 30%  Required minimum cash balance 8,000  Budgeted peso sales, as determined by the sales people: March (actual) P 60,000 April 70,000 May 85,000 June 90,000 July 50,000
  7. 7.  Budgeted Sales mix, as to cash sales and credit sales: Cash Sales 20% Credit Sales 80% Cost of goods sold is at 60%  Purchases of inventory are paid for in: Month of purchase 50% Month after purchase 50%
  8. 8.  Budget balance Sheet as of March 31, current year: Assets Cash P9,000 Accounts receivable 48,000 Inventory 12,000 Plant and equipment (net) 200,000 TotalAssets: P269,600 Liabilities and Equities Interest Payable P 0 Notes Payable 0 Accounts Payable 18,300 Capital Stock 180,000 Retailed earnings 71,300 Total liabilities and equities P269,600
  9. 9. 1. Sales Budget 2. Cash Collection 3. Purchases 4. Cash Disbursements 5. Operating expenses and disbursements for expenses (except interests) 6. Budgeted income statement 7. Budgeted balance sheet
  10. 10. April May June Total Schedule of Sales Budget Credit sales, 80% 56,000 68,000 72,000 196,000 Cash sales, 20% 14,000 17,000 18,000 49,000 Total sales 70,000 85,000 90,000 245,000
  11. 11. April May June Total Schedule of cash collections Credit sales 14,000 17,000 18,000 49,000 Collections from prior month 48,000 56,000 68,000 172,000 Total collections 62,000 73,000 86,000 221,000
  12. 12. April May June Total Schedule of purchase budget Desired ending inventory 15,300 16,200 9,000 40,500 Cost of goods sold 42,000 51,000 54,000 147,000 Total required 57,300 67,200 63,000 187,500 Less beginning inventory 12,600 15,300 16,200 44,100 Total purchases 44,700 51,900 48,600 13,400
  13. 13. April May June Total Computation of costs of good sold at 60% sales Estimated sales 70,000 85,000 90,000 Multiplied by 60% 60% 60% Required costs of goods sold 42,000 51,000 54,000
  14. 14. April May June Total Schedule of Cash disbursements For purchases: For March amount from previous month 18,300 - - 18,300 For April 22,350 22,350 - 44,700 For May - 25,950 25,950 51,900 For June - - 23,400 23,400 Total payment for purchases 40,650 48,300 49,350 138,300
  15. 15. April May June Total Schedule of Operating Expenses & Disbursements for expenses except interest expense: Cash Expense Salaries and Wages 7,500 7,500 7,500 22,500 Freight out 4,200 5,100 5,400 14,700 Advertising 6,000 6,000 6,000 18,000 Other expenses 2,800 3,400 3,600 9,800 Total Disbursements of expenses 20,500 22,000 22,500 65,000 Non-Cash expenses Depreciation 2,000 2,000 2,000 6,000 Total Expenses 22,500 24,000 24,500 71,000
  16. 16. Beginning cash balance 9,000 8,000 8,000 Cash collections 62,000 73,000 86,000 Total Cash available 71,000 81,000 94,000 Cash Budget April to June
  17. 17. Cash Budget April to June Cash Disbursements Inventory purchases 40,650 48,300 49,350 Operating expenses 20,500 22,000 22,500 Equipment purchase 19,750 - - Dividends - - 4,000 Interest - 179 154 Total Disbursements 80,900 70,479 76,004 Minimum cash balance required 8,000 8,000 8,000 Total cash needed 88,900 78,479 84,004 Cash excess (deficit) (17,900) 2,521 9,996 Financing Borrowing 17,900 - - Repayments - (2,521) (9,996) Total cash from financing 17,900 (2,521) (9,996) Ending cash balance 8,000 8,000 8,000
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