The budget committee of Clipboard Office Supply has assembled the following data

P21-21A Preparing an operating budget

The budget committee of Clipboard Office Supply has assembled the following data. As the business manager, you must prepare the budgeted income statements for May and June 2011.
a. Sales in April were $50,000. You forecast that monthly sales will increase 2.0% in May and 2.4% in June.
b. Clipboard maintains inventory of $9,000 plus 25% of sales revenue budgeted for the following month. Monthly purchases average 50% of sales revenue in that same month. Actual inventory on April 30 is $13,000, sales budgeted for July are $65,000.
c. Monthly salaries amount to $3,000. Sales commissions equal 4% of sales for that month. Combine salaries and commissions into a single figure.
d. Other monthly expenses are as follows:
Rent expense $2,600, paid as incurred
Depreciation expense $ 300
Insurance expense $ 200, expiration of prepaid amount
Income tax 20% of operating income

Requirement:
1. Prepare Clipboard Office Supply's budgeted income statements for May and June. Show cost of goods sold computations. (Round all amounts to the nearest $100. (Round amounts ending in $50 or more upward, and amounts ending in less than downward). For example, budgeted May sales are $51,000 ($50,000 x 1.02), and June sales are $52,200 ($51,000 x 1.024)

Click here for the solution: The budget committee of Clipboard Office Supply has assembled the following data

Refer to P21-21A. Clipboard Office Supply's sales are 75% cash and 25% credit

P21-22A Preparing a financial budget

Refer to P21-21A. Clipboard Office Supply's sales are 75% cash and 25% credit. (Use the rounded sales values) Credit sales are collected in the month of purchase and 75% the following month. Salaries and sales commissions are also paid half in the month earned and half the next month. Income tax is paid at the end of the year.

The April 30, 2011 balance sheet showed the following balances:
Cash $25,000
Accounts payable 53,000
Salaries and commission payable 2,500

Requirements:
1. Prepare schedules of (a) budgeted cash collections, (b) budgeted cash payments for purchases, and (c) budgeted cash payments for operating expenses. Show amounts for each month and totals for May and June. Round your computations to the nearest dollar.
2. Prepare a cash budget. If no financing activity took place, what is the budgeted cash balance on June 30, 2011?

Click here for the solution: Refer to P21-21A. Clipboard Office Supply's sales are 75% cash and 25% credit