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Preparing an operating budget

Preparing an operating budget

Preparing an operating budget

Accounting, 9e

P22-22A             Preparing an operating budget

Thumbtack’s   March 31, 2012, budgeted balance sheet follows:

THUMBTACK OFFICE SUPPLY   Budgeted balance Sheet   March 31, 2012   Assets Liabilities   Current:     Current:        Cash      $ 18,000   Accounts due  $ 12,500     Accounts receivable  12,000   Salary and commissions due  1,400     Stock      16,000   Total present debts  $ 13,900     Prepaid insurance  2,200           Total present assets    $ 48,200  Shareholders’ Equity   Factory   assets:     Ordinary shares  $ 16,000     Machines and fixtures 45000 Retained earings  33,300     Less: Accmulated Depreciation    30,000   Total shareholders’ equity  49,300     Total factory assets  15,000  Total debts and     Total   assets   $63,200   shareholders’ equity  $ 63,200                    The   budget committee of Thumbtack Office Supply has collected the following data.   a. Sales in April were   $40,000. You predict that per month sales will enhance 2% over April’s sales   in     May. June’s sales will   enhance 4% over April’s sales. July’s sales will enhance 20% over April’s   sales.     Collections are 80%   during the month of sale and 20% during the month after sale.   b. Thumbtack keeps stock of   $11,000 plus 25% of the COGS budgeted for the next     month. COGS = 50% of   sales income. Purchases are paid 30% during the month of purchase and 70%     in the month after the   purchase.         c. Monthly wages add up to   $7,000. Sales commissions equal 5% of sales for that month. Wages     and commissions are paid   30% in the month incurred and 70% in the next month.   d. Other monthly   expenditures are listed below:

Requirements   1. Prepare   Thumbtack’s sales budget for April and May, 2012. Round all amounts     to the nearest $1.           2. Prepare   Thumbtack’s inventory, purchases, and cost of goods sold budget for     April and May.           3. Prepare   Thumbtack’s operating expenses budget for April and May.   4. Prepare   Thumbtack’s budgeted income statement for April and May.

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