Question

In​ September,TEE Company, a merchandising firm that sells one​ product, assembled the following information and estimates to prepare a budget for October. Expected sales are

46,000 units at a price of $ 34 per unit. The cost of merchandise purchases is expected to be $20 per unit. Selling and administrative expenses are estimated at 319,000​,of which $15,000 is depreciation. The October 1 cash balance is expected to be $38,000. TEE estimates that 80% of each​ month's sales are collected in the month of sale and the remaining 20% is collected in the month after sale. Expected sales for September are $920,000. The company pays for 30%

of its merchandise purchases during the month of​ purchase, and pays the remaining 70% during the month following purchase. Merchandise purchases for September are estimated to be $736,000 and the purchase cost per unit is $20.

All other​ out-of-pocket expenses are paid for in cash.

Requirement​ (a) TEE plans to purchase 31,000 units of merchandise in October. Prepare a cash budget or statement of estimated cash flows for October for the company.

Requirement​ (b) Prepare a budgeted income statement​ (for external reporting​ purposes) for the month ended October 31 for TEE Company.

In September, TEE Company, a merchandising firm that sells one product, assembled the following information and estimates to prepare a budget for October. Expected sales are 46,000 units at a price of $34 per unit. The cost of merchandise purchases is expected to be $20 per unit. Selling and administrative expenses are estimated at $319,000, of which $15,000 is depreciation. The October 1 cash balance is expected to be $38,000. TEE estimates that 80% of each month's sales are collected in the month of sale and the remaining 20% is collected in the month after sale. Expected sales for September are $920,000. The company pays for 30% of its merchandise purchases during the month of purchase, and pays the remaining 70% during the month following purchase. Merchandise purchases for September are estimated to be $736,000 and the purchase cost per unit is $20. All other out-of-pocket expense are paid for in cash. Read the requirements Requirement (a) TEE plans to purchase 31,000 units of merchandise in October. Prepare a cash budget or statement of estimated cash flows for October for the company. (Leave unused cells blank. Use a parentheses or a minus sign for a net cash outflow.) Cash inflows: 0 Requirements - X Cash outflows: Requirements (a) TEE plans to purchase 31,000 units of merchandise in October. Prepare a cash budget or statement of estimated cash flows for October for the company (b) Prepare a budgeted income statement (for external reporting purposes) for the month ended October 31 for TEE Company. Net cash flow Print Done Choose from any list or enter any number in the input fields and then continue to the next question.

Answer 1

Prepare Budget for October
Expected sales in Unit		46,000
Sales Rate $/ Unit		34
Cost of merchandise $/ unit		20
Selling and Admin cost$		3,19,000
Depreciation$		15,000
Cash balance - oct 1 $		38,000
Colection Pattern
80% of each month sales - collected in the month of sale
20% of each month sales - collected in subsequent month
Sept expected Sales $		2,90,000
Purchase payment pattern
30% of its merchandise purchase - during the curent month
Balance 70% during the month following purchse
Purchase of sept Month $		7,36,000
Purchse cost per unit ($/ Unit)		20
Out of pocket expenses - paid in cash
TEF plan to purchase in Oct- Unit		31,000
October Month Sales
Expected sales in Unit		46,000	a
Sales Rate $/ Unit		34	b
Sales $ ( a*b)		15,64,000
Sept expected Sales $		2,90,000
Collection pattern & Value			Cash inflow
20% of Set month Sales collected in Oct					Amnt$
20% * $ 290000					58,000
80% of each month sales - collected in the month of sale					12,51,200
80% * $ 1564000
Total Cash Inflow					13,09,200	C
Calculated Cash Outflow				Amnt($)	Amnt($)
September Purchase				7,36,000
Balance 70% during the month following purchse					5,15,200
70% * $ 736000
October month Purchase
TEF plan to purchase in Oct- Unit-a		31,000
Purchase price / unit -b		20
Purchase value $(a*b)		6,20,000
30% of its merchandise purchase - during the curent month
30% * $ 620000					1,86,000
Cash Outflow					7,01,200	A
Selling and Admin cost$				3,19,000
Less Depreciaiton				15,000
Net Selling & Admin cost					3,04,000	B
Total Cash Outflow					10,05,200	(A+B)=D
Net cash inflow					3,04,000	(C-D)
Opening cash Balance - oct					38,000
Closing cash Balance - oct					3,42,000

Budgted Income Statement		Amnt($)	Amnt($)
Sales
46000 Units *$34/unit			15,64,000
Less : Cost of goods sold
46000 Units *$20/unit			9,20,000
Operating Profit			6,44,000
Less
Selling and Admin cost$			3,19,000
Net profit			3,25,000