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 Business accounting (Comprehensive illustrative format of a Master Budget)
 Business accounting (Comprehensive illustrative format of a Master Budget)
 Business accounting (Comprehensive illustrative format of a Master Budget)
 Business accounting (Comprehensive illustrative format of a Master Budget)
 Business accounting (Comprehensive illustrative format of a Master Budget)
 Business accounting (Comprehensive illustrative format of a Master Budget)
 Business accounting (Comprehensive illustrative format of a Master Budget)
 Business accounting (Comprehensive illustrative format of a Master Budget)
 Business accounting (Comprehensive illustrative format of a Master Budget)
 Business accounting (Comprehensive illustrative format of a Master Budget)
 Business accounting (Comprehensive illustrative format of a Master Budget)
 Business accounting (Comprehensive illustrative format of a Master Budget)
 Business accounting (Comprehensive illustrative format of a Master Budget)
 Business accounting (Comprehensive illustrative format of a Master Budget)
 Business accounting (Comprehensive illustrative format of a Master Budget)
 Business accounting (Comprehensive illustrative format of a Master Budget)
 Business accounting (Comprehensive illustrative format of a Master Budget)
 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”

“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”

Published in: Economy & Finance, Business
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  • 1. Basco, Mary Justine
  • 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. 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. 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.  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.  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.  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.  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. 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. 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. 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. 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. 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. 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. 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. 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. 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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