Managerial Problem Set Intercoastal Electronics
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
3.
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
4.
Cash disbursements budget: 2012
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
3.
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
4.
Cash disbursements budget: 2012