The document provides financial data and budgets for a retail hardware store over a 3 month period. It includes schedules for sales, cash collections, purchases, costs of goods sold, operating expenses, cash disbursements, a cash budget, and projected income statement and balance sheet. The cash budget shows the store will need to borrow $17,900 in April to meet cash needs but will be able to repay those borrowings by June as cash increases due to higher projected sales.

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