Question

In: Accounting

Budgeted Sales: September October November December January 280,000 300,000 320,000 360,000 200,000 Planning Assumptions: 25% of...

Budgeted Sales:

September October November December January
280,000 300,000 320,000 360,000 200,000

Planning Assumptions:
25% of all Sales are cash. Accounts receivable are collected 60% in the month of sale, 30% in the next month, and with the final 10% in the third month.

Cost of Goods sold is 40% of sales. Inventory is purchased in the month prior to the sale, 70% is paid in the month of acquisition and 30% is paid the next month.

Operating Expenses:

Salaries 60,000
Depreciation 10,000
Rent 20,000
Utilities 6,000
Other 5,000

Commissions 2% of prior month's sales.
Supplies 1% current month Cost of Goods sold.

What is the 12/31 budgeted Accounts Receivable?
What is the budgeted balance for Accounts Payable at 12/31 for Inventory purchases?
What is the budgeted amount of Operating Expenses for December?

I am so confused, and I can't find how to figure these out in my textbook

Solutions

Expert Solution

Budgeted Accounts Receivable = $108000+24000 = $132000
From December Sales = $360000 x 75% x 40% = $108000
From November Sales = $320000 x 75% x 10% = $24000

Budgeted Accounts Payable = $200000 x 40% x 30% = $24000

Budgeted Operating Expenses

December
Salaries $           60,000
Depreciation $           10,000
Rent $           20,000
Utilities $             6,000
Other $             5,000
Commissions $             6,400 =320000*2%
Supplies $             1,440 =360000*40%*1%
Total Operating Expenses $       1,08,840

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