Accounting

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Santana Rey expects second quarter 2012 sales of her new line of computer furniture to be the same as the first quarter’s sales (reported below) without any changes in strategy. Monthly sales averaged 40 desk units (sales price of $1,250) and 20 chairs (sales price of $500).

 

    
  Sales†$180,000  
  Cost of goods sold‡$135,000  
  
  Gross profit 45,000  
  Expenses  
  Sales commissions (10%) 18,000  
  Advertising expenses 9,000  
  Other fixed expenses 18,000  
  
  Total expenses$45,000  
  
  Net income$0  
  

  

Reflects revenue and expense activity only related to the computer furniture segment.

† Revenue: (120 desks × $1,250) + (60 chairs × $500) = $150,000 + $30,000 = $180,000
‡ Cost of goods sold: (120 desks × $750) + (60 chairs × $250) + $30,000 = $135,000

  

Santana Rey believes that sales will increase each month for the next three months (April, 48 desks, 32 chairs; May, 52 desks, 35 chairs; June, 56 desks, 38 chairs) if selling prices are reduced to $1,150 for desks and $450 for chairs, and advertising expenses are increased by 10% and remain at that level for all three months. The products’ variable cost will remain at $750 for desks and $250 for chairs. The sales staff will continue to earn a 10% commission, the fixed manufacturing costs per month will remain at $10,000 and other fixed expenses will remain at $6,000 per month.

  

Required:
1.

Prepare budgeted income statements for each of the months of April, May, and June that show the expected results from implementing the proposed changes. Use a three-column format, with one column for each month. (Input all amounts as positive values except any net loss which should be indicated by a minus sign. Omit the "$" sign in your response.)

  

BUSINESS SOLUTIONS
Budgeted Income Statement
For Months of April, May, and June
 AprilMayJune
  $ 
Required:
1.

Prepare a table that shows the computation of cash collections of its credit sales (accounts receivable) in each of the months of June and July. (Omit the "$" & "%" signs in your response.)

 
Cash collections of credit sales (accounts receivable)
  From sales inTotal% CollectedJuneJuly
  April$ 
2.

Prepare a table that shows the computation of budgeted ending inventories (in units) for April, May, June, and July. (Omit the "%" sign in your response.)


Budgeted ending inventories (in units)
 AprilMayJuneJuly
  Next month’s budgeted sales
3.

Prepare the merchandise purchases budget for May, June, and July. Report calculations in units and then show the dollar amount of purchases for each month. (Amounts to be deducted should be indicated with a minus sign. Omit the "$" sign in your response.)

  
ABACUS COMPANY
Merchandise Purchases Budgets
For May, June, and July
 MayJuneJuly
  $ 
4.

Prepare a table showing the computation of cash payments on product purchases for June and July.(Round your answers to the nearest dollar amount. Omit the "$" & "%" signs in your response.)


Cash payments on product purchases (for June and July)
  From purchases inTotal% PaidJuneJuly
  May$ 
5.

Prepare a cash budget for June and July, including any loan activity and interest expense. Compute the loan balance at the end of each month. (Leave no cells blank - be certain to enter "0" wherever required. Input all amounts as positive values except preliminary cash balance and any repayments to bank which should be indicated by a minus sign. Round intermediate calculations and final answers to the nearest dollar amount. Omit the "$" sign in your response.)

  

 

 

 

ABACUS COMPANY
Cash Budget
June and July
 JuneJuly
  $ $ $ 
1.

Monthly sales budgets. (Omit the "$" sign in your response.)


SIMID SPORTS CO.
Sales Budget
January, February, and March 2012
 Budgeted
Units		Budgeted
Unit Price		Budgeted
Total Dollars
  January 2012
2.

Monthly merchandise purchases budgets. (Units to be deducted should be indicated with a minus sign. Omit the "$" & "%" signs in your response.)


SIMID SPORTS CO.
Merchandise Purchases Budget
January, February, and March 2012
 JanuaryFebruaryMarchTotal
  $ $ 
3.Monthly selling expense budgets. (Omit the "$" & "%" signs in your response.)

SIMID SPORTS CO.
Selling Expense Budget
January, February, and March 2012
 JanuaryFebruaryMarchTotal
  $ 
4.

Monthly general and administrative expense budgets. (Do not round your intermediate calculations. Round your final answers to the nearest whole dollar. Omit the "$" sign in your response.)

   
SIMID SPORTS CO.
General and Administrative Expense Budget
January, February, and March 2012
 JanuaryFebruaryMarchTotal
  $ 
5.Monthly capital expenditures budgets. (Leave no cells blank - be certain to enter "0" wherever required. Input all amounts as positive values. Omit the "$" sign in your response.)
  
SIMID SPORTS CO.
Capital Expenditures Budget
January, February, and March 2012
 JanuaryFebruaryMarch
  $ 
6.

Monthly cash budgets. (Leave no cells blank - be certain to enter "0" wherever required. Input all amounts as positive values except negative preliminary cash balance and repayment of loan to bank which should be indicated by a minus sign. Round your intermediate calculations and final answers to the nearest dollar amount. Omit the "$" sign in your response.)

   
SIMID SPORTS CO.
Cash Budget
January, February, and March 2012
 JanuaryFebruaryMarch
  $ $ $ 
7.

Budgeted income statement for the entire first quarter (not for each month). (Round your answers to the nearest dollar amount. Input all amounts as positive values. Omit the "$" sign in your response.)

  
SIMID SPORTS CO.
Budgeted Income Statement
For Three Months Ended March 31, 2012
   $   $    $ 
8.

Budgeted balance sheet as of March 31, 2012. (Be sure to list the assets in order of their liquidity. Round your answers to the nearest dollar amount. Leave no cells blank - be certain to enter "0" wherever required. Input all amounts as positive values. Round your intermediate calculations and final answers to the nearest dollar amount. Omit the "$" sign in your response.)

  
SIMID SPORTS CO.
Budgeted Balance Sheet
March 31, 2012
  Assets   
    $       $   $     $ [removed]    
  
  
  Total Stockholders' Equity  [removed]  
    
  Total Liabilities & Equity  $ [removed]  
    
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