for a Merchandising Organization Peyton Department Store prepares budgets quarterly. The following information is available

| November 9, 2018

for a Merchandising OrganizationPeyton Department Store prepares budgets quarterly. The following information is available for use in planning the second quarter budgets for 2010.Cash$2,000Accounts payable$26,000Accounts receivable25,000Dividends payable17,000Inventory30,000Rent payable1,000Prepaid Insurance2,000Stockholders’ equity40,000Fixtures25,000Total assets$84,000Total liabilities and equity$84,000
Question 7
Not complete
Points out of 1.00

Question text

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.

PEYTON
DEPARTMENT STORE
Balance Sheet
March 31, 2010

Assets

Liabilities
and Stockholders’ Equity

Cash

$2,000

Accounts payable

$26,000

Accounts receivable

25,000

Dividends payable

17,000

Inventory

30,000

Rent payable

1,000

Prepaid Insurance

2,000

Stockholders’ equity

40,000

Fixtures

25,000

Total assets

$84,000

Total liabilities and equity

$84,000

Actual
and forecasted sales for selected months in 2010 are as follows:

Month

Sales
Revenue

January

$70,000

February

50,000

March

40,000

April

50,000

May

60,000

June

70,000

July

90,000

August

80,000

Monthly
operating expenses are as follows:

Wages and
salaries

$26,000

Depreciation

100

Utilities

1,000

Rent

1,000

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.

(a) Prepare a purchases budget for each month of the second quarter ending June
30, 2010.

Peyton
Department Store
Monthly Purchase Budget
Quarter Ending June 30, 2010

April

May

June

Total

Budgeted purchases

$Answer

$Answer

$Answer

$Answer

(b)
Prepare a cash receipts schedule for each month of the second quarter ending
June 30, 2010. Do not include borrowings.
Only use
negative signs, if needed, for: excess receipts over disbursements, balance
before borrowings and cash balances (beginning and ending).

Peyton
Department Store
Schedule of Monthly Cash Receipts
Quarter Ending June 30, 2010

April

May

June

Total

Total cash receipts

$Answer

$Answer

$Answer

$Answer

(c)
Prepare a cash disbursements schedule for each month of the second quarter
ending June 30, 2010. Do not include repayments of borrowings.

Peyton
Department Store
Schedule of Monthly Cash Disbursements
Quarter Ending June 30, 2010

April

May

June

Total

Total cash disbursements

$Answer

$Answer

$Answer

$Answer

(d)
Prepare a cash budget for each month of the second quarter ending June 30,
2010. Include budgeted borrowings and repayments.

Peyton
Department Store
Monthly Cash Budget
Quarter Ending June 30, 2010

April

May

June

Total

Cash balance, beginning

$Answer

$Answer

$Answer

$Answer

Receipts

Answer

Answer

Answer

Answer

Disbursements

Answer

Answer

Answer

Answer

Excess receipts over disb.

Answer

Answer

Answer

Answer

Balance before borrowings

Answer

Answer

Answer

Answer

Borrowings

Answer

Answer

Answer

Answer

Loan repayments

Answer

Answer

Answer

Answer

Cash balance, ending

$Answer

$Answer

$Answer

$Answer

(e)
Prepare an income statement for each month of the second quarter ending June
30, 2010.
Only use
negative signs to show net losses in income.

Peyton
Department Store
Budgeted Monthly Income Statements
Quarter Ending June 30, 2010

April

May

June

Total

Sales

$Answer

$Answer

$Answer

$Answer

Cost of sales

Answer

Answer

Answer

Answer

Gross profit

Answer

Answer

Answer

Answer

Operating expenses:

Wages and salaries

Answer

Answer

Answer

Answer

Depreciation

Answer

Answer

Answer

Answer

Utilities

Answer

Answer

Answer

Answer

Rent

Answer

Answer

Answer

Answer

Insurance

Answer

Answer

Answer

Answer

Interest

Answer

Answer

Answer

Answer

Total expenses

Answer

Answer

Answer

Answer

Net income

$Answer

$Answer

$Answer

$Answer

(f)
Prepare a budgeted balance sheet as of June 30, 2010.

Peyton
Department Store
Budgeted Balance Sheet
June 30, 2010

Assets

Liabilities
and Equity

Cash

$Answer

Merchandise payable

$Answer

Accounts receivable

Answer

Dividend payable

Answer

Inventory

Answer

Rent payable

Answer

Prepaid insurance

Answer

Loans payable

Answer

Fixtures

Answer

Interest payable

Answer

Total assets

$Answer

Stockholders’ equity

Answer

Total liab. & equity

$Answer

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