Posted: July 12th, 2016
Marconi, Inc. a retailer of speciality paints, prepares a master budget. Data for the September master budget are given below. Prepare a balance sheet, an income statement and cash budget for September.
a. The August 31 balance sheet:
Current assets as of August 31:
Accounts receivable 90,000
Buildings and equipment, net 200,000
Accounts payable $53,760
Capital stock 265,000
Retained earnings $25,540
b. Actual and budgeted sales data for September, October, and November are as follows:
August (actual) $120,000
c. Sales are 25% for cash and 75% on credit. Credit sales are collected in the month following sale. There are no bad debts.
d. The gross margin percentage is 60% of sales. The desired ending inventory is equal to 20% of the following months sales. One fifth of the purchases are paid for in the month of purchase and the others are purchased on account and paid in full the following month.
e. The monthly cash operating expenses are $80,000 including the monthly depreciation expense of $7,000.
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