Prepare these accounting problems

P21-20A                                                          Doggy World

                                                                    Income Statement

                                                              Month ending July 31, 2011

                                                                  Dayton                     Ohio                      Company wide

Revenue                                                             $158,400         1,760,000              4,400,000

Expenses:                                                       

Regional managers/headqtrs office              0                           58,000                 122,000          

Cost of materials                                         85,536              880,000                 1,760,000

Salary Expense                                           41,184               440,000                 1,100,000

Depreciation Expense                               7,800                    91,000                    439,000          

Utilities Expense                                       4,000                    46,600                    264,000

Rent Expense                                             2,500                  34,500                    178,000

Total Expenses                                                141,020              1,550,100              3,863,000

Requirements:

1) Prepare a report for July 2011 that shows that performance of the Dayton store, the Ohio region and the Company as a whole.

2.) As the Ohio regional manager, would you investigate the Dayton store on the basis of this report.

3.) Should Doggy World prepare the master budget?  Discuss benefits of budgeting based on performance report.

                                                                        Doggy World

                                                                    Budgeted Statement

                                                              Month ending July 31, 2011

                                                                  Dayton                     Ohio                      Company wide

Revenue                                                             $173,400         1,883,000              4,650,000

Expenses:                                                       

Regional managers/headqtrs office              0                        64,600                    124,000          

Cost of materials                                         91,902              1,035,650              2,092,500

Salary Expense                                           41,616               470,750                 1,162,500

Depreciation Expense                               7,800                    87,500                    446,000          

Utilities Expense                                       4,900                    54,600                    274,000

Rent Expense                                            3,400                    32,700                    169,000

Total Expenses                                                149,618              1,745,800              4,268,000

P21-21A  Preparing an operating budget

The budget committee of Clipboard Office Supply has assembled the following data.  As the business manager, prepare the budgeted income statement for May and June 2011.

Requirements:

a.) sales in April were $50,000.  The forecast sales will increase 2.0% in May and 2.4 %in June.

b.) Clipboard maintains inventory of budgeted for the following month.  Monthly purchases average 50% of sales revenue in that same month.  Actual inventory on April 30 is $13,000.  Sales budgeted for July are $65,000.

c.) Monthly salaries amount to $3,000, sales commissions equal 4% of sales that month.  Combine salaries and commissions into a single figure.

d.) Other monthly expenses are as follows:

                        rent expense                                                       $2,600, paid as incurred

                        depreciation expense                                          $300

                        insurance expense                                              $200, expiration of prepaid amount

                        income tax                                                          20% of operating income

1. Prepare Clipboard Office Supply’s budgeted income statements for May and June.  Show cost of goods sold, computations.  Round all amounts to the nearest $100. (Round amounts ending $50 or more upward and amounts ending less than $50 downward). Budgeted May sales are $51,000 ($50,000x 1.02) and June sales are $52,200 (51,000 x 1.024)

   P21-22A  Preparing a financial budget

    

   Clipboard Office Supply’s sales are 75% cash and 25% credit (use rounded sales values). Credit sales are collected in the month after sales.  Inventory purchases are paid 25% in the month of purchases and 75% the following month.  Salaries and sales commissions are also paid half in the month earned and half the next month.  Income tax is paid at the end of the year. The April 30, 2011 balance sheet showed the following balances:

    

                           Cash                                                                    $25,000

                           Accounts Payable                                              $53,000

                           Salaries and Commissions payable                    $2,500

   Requirements:

1. Prepare schedule of (a) budgeted cash collections, (b) budgeted cash payments for purchases and (c) budgeted cash payments for operating expenses.  Show amounts for each month and totals for May and June. Round to nearest dollar.

2.  Prepare a cash budget similar to exhibit 21-14.  If no financing activity took place, what is the budgeted cash balance on June 30, 2011