Managerial Problem Set Intercoastal Electronics

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  • Topic: Balance sheet, Generally Accepted Accounting Principles, Revenue
  • Pages : 5 (966 words )
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  • Published : December 3, 2012
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INTERCOASTAL ELECTRONICS BUDGETING PROCESS 1. Sales budget: 2011 December $400,000 100,000 300,000 January $440,000 110,000 330,000 February $484,000 121,000 363,000 2012 March $532,400 133,100 399,300 First Quarter $1,456,400 364,100 1,092,300

Total sales........................ Cash sales* ...................... Sales on account† ........... *25% of total sales. †75% of total sales. 2. Cash receipts budget:

2012 January $110,000 33,000 270,000 $413,000 February $121,000 36,300 297,000 $454,300 March $133,100 39,930 326,700 $499,730 First Quarter $ 364,100 109,230 893,700 $1,367,030

Cash sales ............................................ Cash collections from credit sales made during current month* ............................................... Cash collections from credit sales made during preceding month† ............................................... Total cash receipts ............................... *10% of current month's credit sales. †90% of previous month's credit sales.

INTERCOASTAL ELECTRONICS

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Purchases budget: 2011 December Budgeted cost of goods sold.................. Add: Desired ending inventory ........ Total goods needed ........................ Less: Expected beginning inventory..................... Purchases ........................ $280,000 154,000 $434,000 140,000 $294,000 January $308,000 169,400 $477,400 154,000 $323,400 February $338,800 186,340 $525,140 169,400 $355,740 2012 March $372,680 186,340* $559,020 186,340 $372,680 First Quarter $1,019,480 186,340† $1,205,820 154,000** $1,051,820

*Since April's expected sales and cost of goods sold are the same as the projections for March, the desired ending inventory for March is the same as that for February. †The desired ending inventory for the quarter is equal to the desired ending inventory on March 31, 2012. **The beginning inventory for the quarter is equal to the December ending inventory.

INTERCOASTAL ELECTRONICS

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Cash disbursements budget: 2012 January Inventory purchases: Cash payments for purchases during the current month* ........ Cash payments for purchases during the preceding month† ....................................... Total cash payments for inventory purchases ....................... Other expenses: Sales salaries .................................. Advertising and promotion ............ Administrative salaries................... Interest on bonds** ......................... Property taxes** .............................. Sales commissions......................... Total cash payments for other expenses ......................................... Total cash disbursements ................... February March First Quarter

$129,360 176,400 $305,760 $ 21,000 16,000 21,000 15,000 -04,400 $ 77,400 $383,160

$142,296 194,040 $336,336 $ 21,000 16,000 21,000 -05,400 4,840 $ 68,240 $404,576

$149,072 213,444 $362,516 $ 21,000 16,000 21,000 -0-05,324

$ 420,728 583,884 $1,004,612 $ 63,000 48,000 63,000 15,000 5,400 14,564

$ 63,324 $ 208,964 $425,840 $ 1,213,576

*40% of current months' purchases [see requirement (3)]. †60% of the prior month's purchases [see requirement (3)]. **Bond interest is paid every six months, on January 31 and July 31. Property taxes also are paid every six months, on February 28 and August 31.

INTERCOASTAL ELECTRONICS

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Summary cash budget: 2012 January $ 413,000 (383,160) $ 29,840 15,000 100,000 (125,000) (100,000) (2,500) (50,000) February $ 454,300 (404,576) $ 49,724 March $ 499,730 (425,840) $ 73,890 First Quarter $1,367,030 (1,213,576) $ 153,454 15,000 100,000 (125,000) (100,000) (2,500) (50,000) $ (9,046) 35,000 $ 25,954

Cash receipts [from req. (2)]................ Cash disbursements [from req. (4)] .................................. Change in cash balance during period due to operations .... Sale of marketable securities (1/2/12) ............................................. Proceeds from bank loan (1/2/12)...
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