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Budgeted Purchases of Inventory Assignment
Budgeted Purchases of Inventory Assignment
Question in Accounting
Question Description
Quagmire Inc. has prepared the following sales budget for the quarter of April, May and June:
Sales Budget April May June Total Sales in units 12500 16000 14000 42500 Selling price per unit x $50 x $50 x $50 Sales revenue $625000 $800000 $700000 $2125000 All of the sales are on credit.
Quagmire collects from customers as follows:45% of sales in the month of sale
35% in the month following the sale, and
20% in the second month following the sale.
Cash receipts budget April May June Total Collect from current sales 281250 360000 315000 956250 Collect from last month 253750 218750 280000 752500 Collect from 2 mos. Prior 135000 145000 125000 405000 Cash receipts $ 670000 $ 723750 $ 720000 $ 2113750 Quagmire expects cost of goods sold to be 30% of sales.
They keep 10% of next months expected cost of goods sold in ending inventory. Below are budgeted purchases of inventory.
All purchases are paid for in the SAME month as the purchase.
Purchases Budget April May June Total Budgeted cost of goods sold 187500 240000 210000 637500 plus desired ending inventory 24000 21000 17250 17250 Total needs 211500 261000 227250 654750 less beginning inventory (18750) (24000) (21000) (18750) Cost of purchases 192750 237000 206250 636000 Below is the budget for variable and fixed selling and administrative expenses.
Selling and admin expenses are paid in the month AFTER they are incurred.
Fixed expenses include depreciation of 17250 each month.
Sales and Admin Budget April May June Total Variable S&A expenses 125000 160000 140000 425000 Fixed S&A (including depreciation) 172500 172500 172500 517500 Quagmire has $152000 of cash on hand at he beginning of May.
Prepare a cash budget for May and June. (Use excel so that multiple attempts are easier.)
Compute the beginning balance in cash for June.
Hint: the answer is 358500. If you computed this correctly (it was your ending cash balance for May), you should be able to answer the next question too!Compute the ending balance in cash for June.
