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Peyton Department Store_Master Budget




Question;Developing a Master;Budget;for a Merchandising Organization;Peyton Department Store prepares budgets quarterly. The following information;is available for use in planning the second quarter budgets for 2010.Cash dividends of;$17,000 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. Rent is paid during the following month.;The prepaid insurance is for five more months. Cost of goods sold is equal to 50 percent of;sales. Ending inventories are sufficient for 120 percent of the next month's;sales. Purchases during any given month are paid in full during the following;month. All sales are on;account, with 50 percent collected during the month of sale, 40 percent during;the next month, and 10 percent during the month thereafter.;Money can be borrowed and repaid in multiples;of $1,000 at an interest rate of 12 percent per year. The company desires a;minimum cash balance of $2,000 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.="msonormal">


Paper#44620 | Written in 18-Jul-2015

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