Question

HW chapter 22 Question 1 Ruler's March 31, 2014, balance sheet follows: Ruler Office Supply Balance Sheet March 31, 2014 Assets Current Assets Cash Accounts Receivable 20.000 Merchandise Inventory 17.500 Prepaid Insurance 1.700 Total Current Assets 71,200 Property. Plant, and Equipment Equipment and Futures 55.000 Less: Accumulated Depreciation (26,000) 29 000 Total Assets $ 100.200 Liabilities Current Liabilities: Accounts Payable $ 10.000 Salaries and Commissions Payable 3,600 Total Liabilities $ 13,600 Stockholders' Equity Common Stock 13,000 Retained Earmings 73.600 Total Stockholders' Equity 86,600 $ 100,200 Total Liabilities and Stockholders' Equity The budget committee of Ruler Office Supply has assembled the following data Sales in April are expected to be $60.000. Ruler forecasts that monthly sales will increase over April sales in May June's sales will increase by over Apres Julysales will increase 20% over Apr sales Cash receipts are the month of the sale and 20 the month following the sale Ruler maintains inventory of $10.000 plus 25% of the cost of goods sold budgeted for the following month Cost of goods soldul 50% of sales revenue Purchases are pad 70 in the month of purchase and in the month following the purchase Money sales amount to S7000 Sales co n el of sales for that month Sales and common we pad 70 the month incurred and 30% new month Other monthly expenses are as follows - Rent $2.300 paidas incurred Depreciation 5700 Insurance $300 ton of preparamount Income 200 pada incurred & Requirements 1. Prepare Ruler's sales budget for April and May 2014. Round al amounts to the nearest 1 2. Prepare Rules inventory purchases and cost of goods sold budget for April and May Prepare Rules selling and administrative expense budget for April and May

Answer 1

Answer is given below

Sales Budget April $60,000 May $61,200 Budgeted Sales (value) 2 Cost of Good Sold Budget Sales COGS - 50% April $60,000 $30,000 May $61,200 $30,600 June $62,400 $31,200 Inventory Budget COGS - 50% Inventory Budget 1 April $30,000 $17,650 May $30,600 $17,800 Inventory Purchase Budget Budgeted COGS Add: Closing inventory - ($10,000 + 25% of next month COGS) Total Needs Less: Opening Inventory Purchase Budget Closing stock of month will be opening stock of next month April $30,000 $17,650 $47,650 $17,500 $30,150 May $30,600 $17,800 $48,400 $17,650 $30,750 Selling and Administrative Budget Salaries Sales Commission - 5% Rent Depreciation Insurance Income Tax Total Selling and administration expenses April $7,000 $3,000 $2,800 $700 $3001 $2,300 $16,100 May $7,000 $3,060 $2,800 $700 $300 $2,300 $16,160