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MBA642 Managerial Accounting Project 4




Question;Project 4 for ManageData Scenario;You have just been hired into a management position which;requires the application of your budgeting skills. You find out that budgeting has not been a priority of the;company and that they have been experiencing cash shortages. You have contacted;various areas on the organization and have accumulated the information below to;assist you in preparing a comprehensive budget.;Following is actual information relates to the operations of;a merchandiser named Sled Company, a;wholesaler of sleds as of March 31.;Cash;$7,000;Accounts;receivable;15,200;Inventory;22,960;Accounts;Payable;22,000;Actual;and Budgeted sales dollar Data-Sales Budget;March;(actual);$38,000;April;$41,000;May;$42,000;June;$40,000;July;$43,000;Sales;are following type;65%;Cash sales collected in month of;sale;35%;Credit sales collected in the;following month of sale;Credit sales;are collected in the month following sale.;The accounts receivable at March 31 are a result of March credit;sales.;Cost of;goods sold equals;80%;of;sales price;At the;end of each month, inventory is to be on hand equal to;70%;of following;month's sales needs, stated at cost.;Inventory;purchases are paid;47%;in;month of purchase;53%;in;month after purchase;The accounts;payable at March 31 are a result of March purchases of inventory.;Monthly;expenses are as follows and are paid in the month incurred if it is a cash;expense.;Salaries;and wages;13%;of;sales dollar;Rent;$2,500;per;month;Other;cash expenses;4%;of sales dollar;Advertising;$1,000;per;month;Depreciation;$900;for;April only;Depreciation;$1,000;per the;months of May and June;Equipment;purchased for cash;in May;$2,000;Required;1. Prepare a Cash Receipts Budget for the quarter ending;June 30th, by month and quarter.;You do not need a formal sales budget since the sales budget;is above in the data.;2. Prepare a;merchandise purchase budget by month and quarter. A merchandiser purchases in dollars.;I have set up a formatted budget for you. You can see how I have made a few minor;changes to Schedule 2 on page 356, which;is a production budget which we are not preparing.;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.;3. Prepare a Selling;and Administrative Expense Budget, by month and quarter.;My budget is a little bit different than the one in the;text, because I used percentage of sales dollar.;4. Prepare a Cash;Disbursements Budget, by month and quarter.;5. Prepare a cash;budget showing the months and quarter.;Use the format I have provided on the budget sheet.;Do not worry about a minimum cash balance or financing;needs, since we are trying to develop a cash management plan.;6. Based on the;quarterly cash budget you prepared, do you have any recommendations on cash;management. Discuss the type of business and the cash flow problems a company;in this industry might have.;Type your answer on the budget worksheet, where I have set;out the question.;7. Prepare a budgeted;income statement for the quarter ending June 30, 20XX.;You do not need to;show monthly columns.I entered Sales for you on the income statement;8. What do you think;about the survivability of this business?;9. What if the;company finds out the monthly rent will increase to $2,800, what budgets are;effected? Why? What is the New Net;income(Loss)?;If you have linked everything correctly, you;should only have to change the monthly rent on this sheet to determine your;answer to the questions asked. Please;change the rent back to the original amount of 2,500 before you submit. rial Accounting MBA 642


Paper#49796 | Written in 18-Jul-2015

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