Preparing an operating budget
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.