Prepare a cash budget showing the months and quarter

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Reference no: EM13496044

Lucy's Gourmet Basket shop is planning to open for business on July 1, 20XX and she is concerned about  the survivability of her company. She has contacted you to prepare operating budgets for the  quarter ending September 30, 20XX. She would like the budgets set out in monthly and quarterly columns for this time period. This business is a merchandising business  so you do not need to worry about the manufacturing of the gourmet baskets.

Sales:
July 8,000
August 9,000
September 12,000
October 10,000

Selling Price
$58

Ending inventory should be 
16% of next months sales demand in units
Beginning Inventory, July 1
0

Purchase price of baskets
$34

Payment of purchases
48% Paid in month of purchase



52% Paid in month after purchase

Projected Cash Sales and collection history of the credit sales is as follows:
23% Cash sales in the month of sale
48% Sales Collected in following month***based on total sales revenue for the month
27% Sales Collected in Second month following sale
1% is deemed uncollectible and therefore will not be shown as cash inflow but is factored into the calculation of net sales
99%

Monthly Selling , general, and administrative expenses are estimated using the flexible budgeting formula as follows:
Fixed Variable ****Variable operating expenses are based on number of units sold
Sales Personnel Salaries $4,000 ****All selling, general, and administrative expenses are paid in the month incurred
Sales Commission $2
Media Advertising $1,000
Facility Rent $1,800
Insurance related to operations $300

In August, the company plans to purchase equipment using cash.
They plan to pay cash of: $18,000

At the present time, the company does not have a required minimum balance and does not have an open line of credit with any bank. Therefore, you do not need to show these sections on your cash budget. Planned beginning balance in cash $25,000

Prepare the following budgets for the three-month period ending September 30.
The text illustrates an annual budget, but you will be preparing a quarterly budget.
Develop your budgets on the sheet entitled budget. Use this sheet as your data for all of your cell referencing.

1. Sales budget, by month and quarter. See page 355 Schedule 1

2. A cash receipts budget from sales, by month and quarter. See page 362 Schedule 7 I like to develop this budget right after the sales budget, since these budgets are related.

3. A merchandise purchases budget in units and in dollars, by month and quarter.

I have set up a formatted budget for you. You can see how I have adapted this budget to Schedule 3 on page 357.

This company is not producing the product but must buy the baskets to sell to customers.

Make sure you think about the numbers you use in the quarter column. I am specifically talking about how you handle beginning and ending inventory, since the BI and EI should not be added across.

4. Prepare a Selling, General, and Administrative Expense Budget, by month and quarter. See page 361

5. A Cash Disbursements Budget, by month and quarter. See page 363 Schedule 8

6. Prepare a cash budget showing the months and quarter.

You can reference schedule 9 page 365, but I have this budget set up differently to track the cash balance monthly and quarterly.
Lucy's Gourmet Basket shop is planning to open for business on July 1, 20XX and she is concerned about the survivability of her company. She has contacted you to prepare operating budgets for the quarter ending September 30, 20XX. She would like the budgets set out in monthly and quarterly columns for this time period. This business is a merchandising business so you do not need to worry about the manufacturing of the gourmet baskets.

Sales:
November 12,000
December 12,900
January 13,800
February 14,700

If you have linked everything correctly, you should only have to change the purchase price and selling price on this sheet to determine your answer to the questions asked.

Reference no: EM13496044

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