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Developing a Master Budget for a Merchandising Organization Assume Nordstrom prepares budgets quarterly. The following information...
Developing a Master Budget for a Merchandising Organization
Assume Nordstrom prepares budgets quarterly. The following
information is available for use in planning the second quarter
budgets for one of its stores (in thousands).
| NORDSTROM Balance Sheet March 31 |
|||
|---|---|---|---|
| Assets | Liabilities and Stockholders' Equity | ||
| Cash | $ 2,525 |
Merchandise purchases payable |
$2,400 |
| Accounts receivable | 2,040 |
Dividends payable |
710 |
| Inventory | 3,400 |
Stockholders' equity |
8,005 |
| Prepaid Insurance | 150 | ||
| Fixtures | 3,000 | ||
| Total assets | $11,115 |
Total liabilities and equity |
$11,115 |
Actual and forecasted sales for selected months in the upcoming year are as follows:
| Month (in thousands) | Sales Revenue |
|---|---|
| January | $2,600 |
| February | 2,700 |
| March | 3,000 |
| April | 3,600 |
| May | 3,800 |
| June | 3,500 |
| July | 3,200 |
| August | 4,000 |
Monthly operating expenses are as follows:
| Wages and salaries | $750 |
| Depreciation | 75 |
| Advertising | 55 |
| Other costs | 350 |
Cash dividends for the store of $710 thousand are declared during the third month of each quarter and are paid during the first month of the following quarter. Operating expenses, except insurance, rent, and depreciation are paid as incurred. The prepaid insurance is for five more months. Cost of goods sold is equal to 60% of sales. Ending inventories are sufficient for 150% of the next month’s cost of sales. Purchases during any given month are paid in full during the following month. Cash sales account for 50% of the revenue. Of the credit sales, 60% are collected in the next month and 40% are collected in the month after. Money can be borrowed and repaid in multiples of $100 thousand at an interest rate of 12% per year. The company desires a minimum cash balance of $2 million on the first of each month. At the time the principal is repaid, interest is paid on the portion of principal that is repaid. All borrowing is at the beginning of the month, and all repayment is at the end of the month. Money is never repaid at the end of the month it is borrowed.
- Part A
- Part B
- Part C
- Part D
- Part E
- Part F
(f) Prepare a budgeted balance sheet as of June 30.
|
NORDSTROMS Budgeted Balance Sheet (in thousands) June 30 |
|||
|---|---|---|---|
| Assets | Liabilities and Equity | ||
| Cash | Merchandise payable | ||
| Accounts receivable | Dividend payable | ||
| Inventory | |||
| Prepaid insurance | |||
| Fixtures | |||
| Total assets | Stockholders' equity | ||
| Total liab. & equity | |||
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| Nordstrom | ||||||
| Collection Budget | February | March | April | May | June | Total |
| Budgeted Sales Revenue | 2,700.00 | 3,000.00 | 3,600.00 | 3,800.00 | 3,500.00 | 10,900.00 |
| 50% is cash sales | 1,800.00 | 1,900.00 | 1,750.00 | 5,450.00 | ||
| 60% of credit sales in the next month | 900.00 | 1,080.00 | 1,140.00 | 3,120.00 | ||
| 40% of credit sales in the second month | 540.00 | 600.00 | 720.00 | 1,860.00 | ||
| Total Scheduled Collections | 3,240.00 | 3,580.00 | 3,610.00 | 10,430.00 |
| Note G: Accounts Receivable | Amount $ |
| 40% of credit sales of May | 760.00 |
| 100% of credit sales of June | 1,750.00 |
| Accounts Receivable for June | 2,510.00 |
| Material Purchase Budget | April | May | June | Total | July | Note |
| Budgeted Sales Revenue | 3,600.00 | 3,800.00 | 3,500.00 | 10,900.00 | 3,200.00 | A |
| Cost of goods sold | 2,160.00 | 2,280.00 | 2,100.00 | 6,540.00 | 1,920.00 | B=A*60% |
| Add: Closing | 3,420.00 | 3,150.00 | 2,880.00 | 2,880.00 | C= 150% of A of next month. | |
| Less: Opening | 3,400.00 | 3,420.00 | 3,150.00 | 3,400.00 | D= 150% of A of same month. For April its inventory of 31st March. | |
| Material Purchase Budget | 2,180.00 | 2,010.00 | 1,830.00 | 6,020.00 | E | |
| 100% paid in next month | 2,400.00 | 2,180.00 | 2,010.00 | 6,590.00 | F= 100% of E of previous month. For April its accounts payable of 31st March. | |
| Cash disbursement for materials | 2,400.00 | 2,180.00 | 2,010.00 | 6,590.00 |
| Note H: Accounts payable | Amount $ |
| 100% of purchases of June | 1,830.00 |
| Cash budget | April | May | June | Total |
| Beginning Cash Balance | 2,525.00 | 2,000.00 | 2,041.00 | 2,525.00 |
| Plus: Collections | 3,240.00 | 3,580.00 | 3,610.00 | 10,430.00 |
| Cash Available | 5,765.00 | 5,580.00 | 5,651.00 | 12,955.00 |
| Disbursements | ||||
| Material Payment | 2,400.00 | 2,180.00 | 2,010.00 | 6,590.00 |
| Wages and salaries | 750.00 | 750.00 | 750.00 | 2,250.00 |
| Advertising | 55.00 | 55.00 | 55.00 | 165.00 |
| Other costs | 350.00 | 350.00 | 350.00 | 1,050.00 |
| Dividends | 710.00 | - | - | 710.00 |
| Total cash payments | 4,265.00 | 3,335.00 | 3,165.00 | 10,765.00 |
| Ending cash balance before financing | 1,500.00 | 2,245.00 | 2,486.00 | 2,190.00 |
| Financing | ||||
| Borrowings | 500.00 | - | - | 500.00 |
| Repayments | - | (200.00) | (300.00) | (500.00) |
| Interest paid | - | (4.00) | (9.00) | (13.00) |
| Total effects of financing | 500.00 | (204.00) | (309.00) | (13.00) |
| Ending cash balance | 2,000.00 | 2,041.00 | 2,177.00 | 2,177.00 |
| Income Statement | April | May | June | Total |
| Sales | 3,600.00 | 3,800.00 | 3,500.00 | 10,900.00 |
| Less: Cost of merchandise sold | 2,160.00 | 2,280.00 | 2,100.00 | 6,540.00 |
| Gross Margin | 1,440.00 | 1,520.00 | 1,400.00 | 4,360.00 |
| Less: Operating expenses | ||||
| Wages and salaries |
 ekkarill92 answered 1 year agoRelated SolutionsDeveloping a Master Budget for a Merchandising Organization Assume Nordstrom prepares budgets quarterly. The following information...Developing a Master Budget for a Merchandising
Organization
Assume Nordstrom prepares budgets quarterly. The following
information is available for use in planning the second quarter
budgets for one of its stores (in thousands).
NORDSTROM
Balance Sheet
March 31
Assets
Liabilities and Stockholders' Equity
Cash
$ 2,525
Merchandise purchases payable
$2,400
Accounts receivable
2,040
Dividends payable
710
Inventory
3,400
Stockholders' equity
8,005
Prepaid Insurance
150
Fixtures
3,000
Total assets
$11,115
Total liabilities and equity
$11,115
Actual and forecasted sales for selected...
Developing a Master Budget for a Merchandising Organization Assume Nordstrom prepares budgets quarterly. The following information...Developing a Master Budget for a Merchandising
Organization
Assume Nordstrom prepares budgets quarterly. The following
information is available for use in planning the second quarter
budgets for one of its stores (in thousands).
NORDSTROM
Balance Sheet
March 31
Assets
Liabilities and Stockholders' Equity
Cash
$ 2,525
Merchandise purchases payable
$2,400
Accounts receivable
2,040
Dividends payable
710
Inventory
3,400
Stockholders' equity
8,005
Prepaid Insurance
150
Fixtures
3,000
Total assets
$11,115
Total liabilities and equity
$11,115
Actual and forecasted sales for selected...
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Organization
Dils Brother Department Store prepares budgets quarterly. The
following information is available for use in planning the second
quarter budgets for 2017.
Dils Brother Department Store
Balance Sheet
March 31, 2017
Assets
Liabilities and Stockholders'
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Accounts payable
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Accounts receivable
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Rent payable
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budget on a quarterly basis. The following data has been assembled
to assist in preparation of the master budget for the second
quarter.
a. As of March 31 (the end of the prior quarter), the company’s
balance sheet showed the following account balances:
Cash
$9,000
Acct Receviable
48,000
Inventory
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Buildings & Equip. (net)
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Retained Earnings
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Nadia Company, a merchandising company, prepares its master budget on a quarterly basis. The following data...Nadia Company, a merchandising company, prepares its master
budget on a quarterly basis. The following data has been assembled
to assist in preparation of the master budget for the second
quarter.
a. As of March 31 (the end of the prior quarter), the company’s
balance sheet showed the following account balances:
Cash
$9,000
Acct Receviable
48,000
Inventory
12,6000
Buildings & Equip. (net)
214,100
Acct. Payable
18,300
Common Stock
190,000
Retained Earnings
75,400
Totals
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283,700
b. Sales for March total...
Nadia Company, a merchandising company, prepares its master budget on a quarterly basis. The following data...Nadia Company, a merchandising company, prepares its master
budget on a quarterly basis. The following data has been assembled
to assist in preparation of the master budget for the second
quarter.
a. As of March 31 (the end of the prior quarter), the company’s
balance sheet showed the following account balances:
Cash
$9,000
Acct Receviable
48,000
Inventory
12,6000
Buildings & Equip. (net)
214,100
Acct. Payable
18,300
Common Stock
190,000
Retained Earnings
75,400
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budget on a quarterly basis. The following data has been assembled
to assist in preparation of the master budget for the second
quarter.
a. As of March 31 (the end of the prior quarter), the company’s
balance sheet showed the following account balances:
Cash
$9,000
Accounts receivable
48,000
Inventory
12,600
Buildings and equipment (net)
214,100
Accounts payable
18,300
Common Stock
190,000
Retained earnings
75,400
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to assist in preparation of the master budget for the second
quarter.
a. As of March 31 (the end of the prior quarter), the company’s
balance sheet showed the following account balances:
Cash
$9,000
Accounts receivable
48,000
Inventory
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Accounts payable
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budget on a quarterly basis. The following data have been assembled
to assist in preparation of the master budget for the second
quarter
a.
As of December 31 (the end of the prior quarter), the company’s
balance sheet showed the following account balances:
Cash
$
13,100
Accounts receivable
55,800
Inventory
18,620
Buildings and equipment (net)
135,000
Accounts payable
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47,000
Common stock
115,000
Retained earnings
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