Question

Kraft is a Wholesale distributor of artisan cheese and ice cream.

The following information is available for April 2017.

The beginning cash balance is $400,000.

Required: Prepare the following for April 2017 – Be sure to read the additional information below

a. Sales budget

b. Purchase Budget

c. Cash Budget

d. Budgeted Income Statement.

Additional info:

• Beginning cash balance is $400,000 • Purchases of merchandise are paid 60% in the current month and 40% in the following month. Purchases totaled $1,800,000 in March and are estimated to be $2,000,000 in May. • Employee wages and salaries are paid for in the current month. Employee Expenses for April totaled $156,000. • Overhead expenses are paid in the next month. The accounts payable amount for these expenses from March is $80,000 and for May will be $90,000. April’s overhead expenses total $80,000. • Sales are on credit and are collected 70% in the current period and the remainder in the next period. March’s sales were $3,000,000 and May’s sales are estimated to be $3,200,000. Bad debts average 1% of sales. (Allowance for Bad Debts – non-cash ) • Selling and administrative expenses are paid monthly and total $450,000, including $40,000 of depreciation. • All unit costs for April are the same as they were in March.

Answer 1

A. Forecasted Sales for April (Average of March and May) = 3,100,000.00

B. Budgeted Purchase for April (Average of March and May) = 1,900,000.00